/raid1/www/Hosts/bankrupt/TCR_Public/020416.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Tuesday, April 16, 2002, Vol. 6, No. 74
Headlines
360NETWORKS: Resolves Kajima Design-Build Agreement Dispute
A.B. WATLEY: Trading on Pink Sheets After Nasdaq Delisting
AEI RESOURCES: Kentucky Court Confirms Plan of Reorganization
ANC RENTAL: Seeks Okay to Reject Three Houston Airport Leases
ADELPHIA BUSINESS: Seeks Injunction Against Utility Companies
ADVANCED SWITCHING: Shareholders Approve Plan of Liquidation
ADVANTICA RESTAURANT: Posts Same-Store Sales for March Quarter
AMERALIA: Nasdaq Extends Listing of Shares on SmallCap Market
AMERALIA: Bank of America Extends Loan Maturity to June 30, 2002
ARTHUR ANDERSEN: Canadian Partners to Join Deloitte & Touche
BULL RUN: Lenders Amend and Extend Credit Facility to June 28
CJF HOLDINGS: Trustee Gets Court Approval to Hire McShane Group
CENTRAL EUROPEAN MEDIA: Shareholders' Meeting Set for May 15
COMDISCO INC: Wants to Assume & Assign Healthcare Pacts to GECC
COVANTA ENERGY: Wins Nod to Pay Critical Vendors and Suppliers
DIEDRICH COFFEE: Working Capital Deficit Tops $3.6 Million
DOLLAR GENERAL: Says Moody's Downgrade Unreflective of Profile
DYNASTY COMPONENTS: Gets Extension of CCAA Protection to May 30
EOTT ENERGY: Bank Extends Credit Facility Until May 31, 2002
EASYRIDERS INC: Hearing on Nomura Settlement Pact Set for May 1
ENRON CORP: ENA Selling Keyspan Gas Contract for $5.7 Million
ENRON: Klayman Commences Probe for Broker-Dealer Liability
ENRON CORP: Judge Gonzalez Moves Dynegy Lawsuit to Houston
ENRON CORP: GE Power Systems to Complete Wind Acquisition Soon
EXIDE TECHNOLOGIES: Files for Chapter 11 Protection in Delaware
EXIDE TECHNOLOGIES: Case Summary & Largest Unsecured Creditors
FFC HOLDING: Pushing for Lease Decision Time Extension to July 8
FEDERAL-MOGUL: Future Rep. Wins Nod to Hire Resolutions LLC
FOSTER WHEELER: Banks Extend Waivers Under Credit Facilities
GALEY & LORD: Creditors' Meeting Scheduled for May 23, 2002
HAYES LEMMERZ: Court Okays Professional Compensation Procedures
IT GROUP: Court Allows Payments of Critical Trade Vendor Claims
JACOBSON STORES: Fourth Quarter Sales Plunge 26% to $154 Million
KAISER ALUMINUM: Asbestos Claimants' Panel Taps Legal Analysis
KAISER ALUMINUM: Fourth Quarter Net Loss Balloons to $583 Mill.
KMART CORP: Cott Beverages Pushing for Prompt Decision on Pacts
KNOWLES ELECTRONICS: Misses Interest Payment on 13-1/8% Notes
LODGIAN INC: Seeks Nod to Assume Hawthorne Employment Agreement
MAGELLAN HEALTH: S&P Affirms B+ Counterparty Credit Rating
MARINER POST-ACUTE: Resolves Cribb/Fitzgerald Claims Dispute
MAXXAM INC: Full-Year 2001 Net Loss Burgeons to $456 Million
MCCRORY: Obtains Approval to Extend Exclusivity through April 29
MICROFORUM: CCAA Plan Filing Period Extended through June 6
MPOWER: Seeks Court Approval to Retain Young Conaway as Counsel
MUTUAL RISK MANAGEMENT: S&P Junks Counterparty Credit Rating
NATIONAL STEEL: Court Okays Dewey Ballantine as Special Counsel
NATIONSRENT: Seeks Exclusivity Extension through August 16
NIASKI ENVIRONMENTAL: Shares Knocked-Off CDNX Listing
PACIFIC GAS: Court Tentatively Approves Disclosure Statement
PILLOWTEX: Sues Westpoint Stevens for Breach of License Pact
PRECISION SPECIALTY: Court Extends Time to File Plan to June 30
PRINTING ARTS: Secures Okay to Hire Held Kranzler as Accountants
PROVANT: IIR Withdrawals Proposal to Buy Outstanding Bank Debt
SAFETY-KLEEN: UST Amends & Expands Official Creditors' Committee
STROUDS INC: Del. Court Confirms Proposed Plan of Liquidation
STANDARD AUTOMOTIVE: Lenders' Agent Seeks Chapter 11 Trustee
TEMBEC: Temlam Inc. Intends to Acquire Scierie Amos Sawmill
TIME WARNER: Names Catherine Hemmer as Corporate Operations EVP
TRICO STEEL: Gets Extension to July 19 to File a Chapter 11 Plan
TRUSERV CORPORATION: Fiscal 2001 Net Loss Tops $50 Million
TRUSERV CORP: Amends Senior Note and Credit Facility Agreements
U.S. AGGREGATES: Wins Final Approval of $17.5MM DIP Facility
U.S. STEEL CORP: Selling North VA Assets of Mining Company Unit
UNITED DEFENSE INDUSTRIES: Shareholders' Meeting Set for May 21
W.R. GRACE: Judge Fitzgerald Sends Bar Date Motions to J. Wolin
WASH DEPOT: Seeking Court Authority to Employ Ernst & Young
WESTPOINT STEVENS: Sets Shareholders' Meeting for May 8, 2002
*********
360NETWORKS: Resolves Kajima Design-Build Agreement Dispute
-----------------------------------------------------------
360networks inc., and Kajima Construction Services propose a
Stipulation to settle their disagreement.
The Debtors and Kajima Construction Services are parties to a
Design-Build Agreement with regards to design and construction
of a POP facility at a real property known as 3554 Ruffin Road
South, in San Diego, California.
The premises were leased by the Debtors from H.G. Fenton
Company, formerly known as Western Salt Company. Kajima
Construction alleges that the Debtors breached the Contract by
failing to pay the sum of $3,501,842 and filed for a mechanic's
lien.
The proposed stipulation provides that:
(i) the Debtors consent to the relief from the automatic stay
for the sole and limited purpose of permitting Kajima
Construction to continue the State Court Action in the
Superior Court of the State of California for the County
of San Diego against the owner of the premises;
(ii) approval of this stipulation by the Court will constitute
relief from stay to permit Kajima to fully enforce and
foreclose its mechanics lien against the premises and the
owner, provided, however, that it does not affect any
rights and claims Kajima might assert with the Debtors or
any property of the Debtors' estates. The Debtors
reserve all rights with respect to any such rights and
claims.
H.G. Fenton Objects
H.G. Fenton Company disputes the proposed stipulation between
the Debtors and Kajima Construction Services Inc.
According to Brett H. Miller, Esq., at Otterbourg, Steindler,
Houston & Rosen, in New York, the proposed stipulation unfairly
and inappropriately permits Kajima Construction to enforce its
mechanic's lien against the premises and Fenton. "Since the
foreclosure action has not been finalized in the California
State Court, and since the Bankruptcy Court has no jurisdiction
over a foreclosure action involving two non-debtor entities,
this Court has no authority to enter an order approving the
stipulation," Mr. Miller asserts. (360 Bankruptcy News, Issue
No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
A.B. WATLEY: Trading on Pink Sheets After Nasdaq Delisting
----------------------------------------------------------
A.B. Watley Group Inc. (NASDAQ:ABWG), premier financial services
software provider (www.abwatley.com), has received a
determination on April 3, 2002 from the Nasdaq Listing
Qualifications Panel that the Company's request for continued
listing on The Nasdaq National Market was denied.
In accordance with such denial, the Company's common stock was
delisted from the Nasdaq Stock Market effective with the open of
business, April 4, 2002. The Company's common stock is currently
being traded on the pink sheets. Steven Malin, Chairman of the
Board of Directors of the Company, stated, "the Company expects
to correct the deficiencies which led to such delisting and
appeal the determination. There can be no assurance, however,
that such appeal will be successful."
The Company has restructured its software license agreement with
E*TRADE Group, Inc. to grant E*TRADE a perpetual license of the
Company's proprietary software for a flat fee rather than a
limited term license with fees based on monthly usage. The
Company will perform certain additional customization of its
software and transition services for E*TRADE and will receive
aggregate compensation of $5,000,000, paid in cash and E*TRADE
stock, upon completion of such customization and transition.
Watley retains all ownership interest in its proprietary
software.
The Company also announced that the following changes in
management have been made: Steven Malin has resigned as Chief
Executive Officer, remaining as Chairman of the Board; Leon
Ferguson, Executive Vice President and Chief Information
Officer, has been named Chief Executive Officer; Anthony Huston
has resigned as President and director; and Joseph Ramos has
resigned as Executive Vice President and Chief Financial
Officer. Jan Chason, a former partner at Ernst & Young LLP, is
acting as interim Chief Financial Officer.
The Company announced that one of the holders of its Series A
Convertible Preferred Stock leading an investment group has lent
an aggregate of $2,500,000 to the Company. The proceeds of such
loans will be used for working capital. A member of the group
received warrants to purchase 1,000,000 shares of the Company's
common stock as part of its $1,600,000 loan.
In connection with the loans, the holders of more than ninety
percent of the Company's Series A Convertible Preferred Stock
have (1) waived all adjustments to the (a) conversion price and
the number of shares of stock issuable upon conversion of the
Series A Convertible Preferred Stock and (b) exercise price of
the warrants and the number of shares of stock issuable upon
exercise of the warrants issued to such holders of the Series A
Convertible Preferred Stock that would otherwise have been
required as a result of the loan from the institutional
investor; (2) waived the right to have the Series A Convertible
Preferred Stock redeemed as a result of the (a) the Company's
failure to have a registration statement covering the shares of
common stock issuable upon conversion of the Series A
Convertible Preferred Stock and the exercise of the warrants
issued to such holders declared effective or, if effective,
unavailable at any time prior to September 30, 2002 and (b) the
suspension from listing and the failure of the Company's common
stock to be listed until September 30, 2002, and (3) waived the
right to receive dividends on the Series A Convertible Preferred
Stock, which dividends are payable in shares of Common Stock,
until the Company's next annual meeting of stockholders and an
increase of the authorized but unissued shares of the Company's
common stock sufficient to declare and pay accrued dividends on
the Series A Convertible Preferred Stock shall have been
approved by the Company's stockholders. As a result of the
Company's failure to file and have the registration statement
declared effective by the agreed upon dates and the delisting,
the Company is required to pay liquidated damages to the holders
of the Series A Convertible Preferred Stock of 2% of the
purchase price paid by such holders for their shares of stock
for each 30 day period until the failures have been cured. The
holders may demand cash or an accrual to the liquidation
preference amount of the Series A Convertible Preferred Stock.
AEI RESOURCES: Kentucky Court Confirms Plan of Reorganization
-------------------------------------------------------------
AEI Resources Holding, Inc., a major U.S. coal producer in
Central Appalachia, the Illinois Basin and the Rocky Mountains,
said that the U.S. Bankruptcy Court for the Eastern District of
Kentucky in Lexington has approved the Company's Plan of
Reorganization.
Concurrently, the Company announced a new Board of Directors and
a realignment of management, both of which will take effect when
the reorganization plan becomes effective and the Company
emerges from Chapter 11, which is expected by the end of April.
Also as of the effective date of the reorganization, the Company
will gain access to its $250 million exit financing facility
from Deutsche Bank, which also arranged AEI's $150 million
debtor-in-possession (DIP) facility. The exit facility will be
used to repay the DIP facility and will be available to
supplement cash flow to fund day-to-day operations and capital
expenses.
"We wish to thank our vendors and customers for their support
and our employees for their hard work and dedication," said
Chairman and Chief Executive Officer Donald Brown. "These are
vital to any business at any time, particularly to one going
through Chapter 11."
"Now it is time to focus on the future. Despite the temporary
impact of the unusually warm winter, our long-term prospects for
production, revenues and earnings remain strong," Mr. Brown
added. "With our new capital structure, we can now concentrate
our energies on further strengthening our operations and our
financial performance in three specific areas. First,
management will focus on obtaining maximum cost reductions and
productivity improvements at each operation. Second, safety and
loss control will continue to be a top priority of all
employees. Third, we will continue to pay down debt to enhance
financial flexibility."
Mr. Brown praised the new Board of Directors. "Their extensive
experience and the depth of their wisdom will be invaluable as
we guide the Company into the future," he said. "In the years
to come, the new Board will build upon our long-standing
commitments to our vendors, our customers and our employees."
The new Board will be composed of:
-- Donald Brown, who has been Chairman and CEO of AEI since
last June and has more than three decades of high-level
experience in the coal industry. Previously, he served nine
years as President of Cyprus Coal and its successor, Cyprus Amax
Coal Company. Mr. Brown is a member and former Director of the
National Mining Association and a member of the National Coal
Council.
-- B.R. (Bobby) Brown, who has had more than 40 years of
high-level experience in the industry, including more than two
decades in senior management positions with Consol Energy, most
recently as Chairman, CEO and a Director of Consol Energy. He
also is former Chairman of the Coal Industry Advisory Board to
the International Energy Agency and of the National Mining
Association and the Bituminous Coal Operators Association.
-- Robert C. Scharp, the former CEO of Anglo Coal Australia
Pty Ltd. (previously Shell Coal Group) of Brisbane, who prior to
that had a 22-year career with Kerr-McGee Corporation, including
four years as president of its coal division. Previously, he
was associated with Phelps Dodge. He is a member of the
American Institute of Mining Engineering/Society of Mining
Engineers and Trustee Development Council of the Colorado School
of Mines.
-- John J. Delucca, who is currently Executive Vice
President-Finance and Administration, Chief Financial Officer
and member of the Executive Committee of Coty, Inc. He has more
than three decades of high-level experience in finance and
investments with RJR Nabisco, Hascoe Associates, The Lexington
Group, The Trump Group, International Controls Corporation,
Textron Corporation and life insurance companies.
-- Scott Tepper, Vice Chairman of the Board of Bio-Plexus
Inc., a medical device company. Previously, he was founder and
principal of KST Consulting, a healthcare and healthcare
consulting firm, where his projects included several consumer
care companies and he served four years as Acting Chief
Operating Officer of FoxMeyer Canada, which became the largest
healthcare technology company in Canada.
In addition, the Company announced that Stephen Addington will
step down as President to pursue other interests as of the
effective date of the Plan of Reorganization. Mr. Brown will
assume the Presidency and will remain Chairman and Chief
Executive Officer. Michael Nemser will remain Chief Financial
Officer.
"Stephen has made enormous contributions to this Company," Mr.
Brown said. "His foresight and energy were crucial in guiding
the Company through a troubled period, and we wish him the best
in his future endeavors."
On February 28, AEI and its subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code after its voting secured lenders, senior
noteholders and subordinated noteholders unanimously approved a
pre-packaged debt-restructuring plan. In addition to burdensome
debt, AEI was harmed by severe financial difficulties at
Frontier Insurance Company, its primary issuer of reclamation
and worker compensation bonds, which forced AEI to incur
substantial expenses to replace those bonds.
Under the restructuring, the Company's pre-petition debt of
approximately $1.3 billion will be reduced to approximately $925
million of restructured debt. Specific terms include:
-- Existing bank debt will be converted, on a pro rata
basis, into approximately $475 million of new senior secured
term notes, $450 million of new senior notes and cash.
Currently, AEI has existing bank debt of approximately $970
million.
-- Existing senior notes and industrial revenue bonds will
be converted into 80% of the common stock to be issued in the
reorganized Company.
Currently, AEI has existing senior notes and industrial revenue
bonds with an aggregate principal amount of $346.8 million.
-- Existing subordinated notes will be converted into 20%
of the new common stock. Currently, AEI has existing
subordinated notes with an aggregate principal amount of $150
million.
-- Existing common stock will be canceled.
AEI is the fourth-largest steam coal producer in the United
States as measured by revenues and the second-largest steam coal
producer in the Central Appalachian coal region as measured by
production. The Company produced 46 million tons of coal in
2001. AEI primarily mines and markets steam coal from mines in
Kentucky, West Virginia, Tennessee, Indiana, Illinois and
Colorado. Its 27 surface mines and 17 underground mines are
operated in three regions -- Central Appalachia, the Illinois
Basin and the Rocky Mountains.
ANC RENTAL: Seeks Okay to Reject Three Houston Airport Leases
-------------------------------------------------------------
ANC Rental Corporation, and its debtor-affiliates ask for Court
approval to reject the Alamo Concession Agreement, the Future
Alamo Concession Agreement, and the Alamo Facilities Lease at
the George Bush Intercontinental Airport in Houston. The Debtors
also ask the Court to allow them to assume the National
Concession Agreement, the Future National Concession Agreement,
the National Lease and the National Facilities Lease.
As part of their reorganization efforts, says Bonnie Glantz
Fatell, Esq., at Blank, Rome, Comisky & McCauley LLP in
Wilmington, Delaware, the Debtors are seeking to consolidate
certain operations where feasible to eliminate redundancies and
achieve concomitant cost savings. The Debtors estimate that the
termination of the Alamo Agreements and Leases as well as the
assumption of National's will yield over $2,308,000 per year in
fixed facility costs and other operational cost savings. This
will also improve the Debtors' current level of service to the
customers of both Alamo and National brands. (ANC Rental
Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
ADELPHIA BUSINESS: Seeks Injunction Against Utility Companies
-------------------------------------------------------------
Harvey R. Miller, Esq., at Weil Gotshal & Manges LLP in New
York, relates that in connection with the operation of their
businesses and management of their properties, Adelphia Business
Solutions, Inc., and its debtor-affiliates obtain electricity,
telephone, telecommunication, and similar services from many
different utility companies and telecommunication vendors
throughout the United States.
Pursuant to Section 366 of the Bankruptcy Code, for the 20-day
period after the commencement of a bankruptcy case, a utility is
not allowed to discontinue service to a debtor solely because a
the bankruptcy case has commenced or because of the failure of
the debtor to pay a pre-petition debt. Following the 20-day
period, however, Mr. Miller fears that utilities may discontinue
service to the debtor if the debtor does not provide adequate
assurance of future performance of its post-petition
obligations.
If the Utility Companies are permitted to terminate Utility
Services on the 21st day after the Commencement Date, the
Debtors will be forced to cease operation of their facilities,
resulting in a substantial loss of revenues and causing
irreparable harm to the Debtors' business. Mr. Miller believes
that cessation of key utility services directly impacts the
Debtors' ability to provide services to their customers, and
jeopardizes the very core of the Debtors' restructuring efforts.
It is therefore critical that Utility Services continue
uninterrupted.
The Debtors seek immediate issuance of an order:
A. determining that the Utility Companies have been provided
with adequate assurance of future performance, and may not
alter, refuse, or discontinue any Utility Service,
B. determining that the Debtors are not required to provide the
Utility Companies with additional deposits or security, and
C. establishing procedures for determining requests by Utility
Companies for additional assurances of future performance
beyond those proposed in this Motion.
The Debtors submit that the Utility Companies have been provided
with adequate assurance of the Debtors' future performance of
their post-petition obligations, given that the Debtors agree to
pay for Utility Services rendered to the Debtors following the
Commencement Date. Payment is part of an administrative expense
of their Chapter 11 estates for Utility Services rendered to the
Debtors.
The Debtors request that the Court issue an order establishing
the following procedures for determining requests by Utility
Companies for additional assurances of future performance in the
event such Utility Companies demand assurances beyond those set
forth in this Motion. Mr. Miller informs the Court that the
Debtors will serve such order by first-class mail within 5
business days of its entry on all of the Utility Companies. The
order will provide that any Utility Company may request in
writing, within 25 days of the date that the order is entered,
additional assurances of payment in the form of deposits or
other security.
In the event that a Utility Company makes a timely request for
additional assurance that the Debtors believe is unreasonable,
the Debtors may file a Motion for Determination of Adequate
Assurance of Performance and set such motion for a hearing. Any
Utility Company requesting additional assurance is prohibited
from discontinuing, altering, or refusing service to the
Debtors. They are deemed to have adequate assurance of payment
unless the Court issues a final order to the contrary.
Mr. Miller submits that the Debtors have an excellent pre-
petition payment history with the Utility Companies. To the best
of the Debtors' knowledge, there are no significant defaults or
arrearages with respect to undisputed Utility Service invoices,
other than payment interruptions caused by the preparation for
and commencement of these Chapter 11 cases. In addition, the
Debtors represent that they will continue to pay all undisputed
post-petition obligations, including utility bills, as billed
and when due. Moreover, Mr. Miller points out that the Debtors
have obtained interim post-petition financing in the aggregate
amount of $125,000,000, which should constitute adequate
assurance for the Utility Companies of the Debtors' timely
future payments of its obligations.
The adequate assurance proposed, which includes explicitly
granting administrative expense priority to any postpetition
utility obligations, will provide more than sufficient
protection to the Utility Companies. Further, Mr. Miller adds
that the relief requested ensures that the Debtors' business
operations will not be disrupted and also provides the Utility
Companies with a fair and orderly procedure for determining
requests for additional adequate assurance. (Adelphia Bankruptcy
News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
ADVANCED SWITCHING: Shareholders Approve Plan of Liquidation
------------------------------------------------------------
Advanced Switching Communications, Inc. (Nasdaq: ASCX) said that
its stockholders authorized and approved the Company's plan of
liquidation at a special meeting of stockholders held on April
9, 2002.
The Company intends to file a certificate of dissolution on or
about May 10, 2002 with the Delaware Secretary of State pursuant
to the plan of liquidation. Upon filing the certificate of
dissolution, the Company will request that the Nasdaq Stock
Market delist the Company's common stock and will petition the
Securities and Exchange Commission for relief from its
obligation to file periodic and other reports under the
Securities Exchange Act of 1934. The Company will also close
its stock transfer books and discontinue recording transfers of
common stock at the close of business on the day the certificate
of dissolution is filed. Thereafter, certificates representing
the common stock will not be assignable or transferable on the
Company's stock transfer books except by will, intestate
succession or operation of law.
Pursuant to Delaware law, the Company will continue to exist for
three years after the dissolution becomes effective or for such
longer period as the Delaware Court of Chancery shall direct,
for the purpose of prosecuting and defending suits, settling and
closing its business, disposing of any property, discharging its
liabilities and distributing to its stockholders any remaining
assets, but not for the purpose of continuing business. In
accordance with the plan of liquidation, the Company will make
distributions of remaining assets, if any, only to stockholders
of record at the close of business on the day the certificate of
dissolution is filed.
The Company is currently unable to predict the precise nature,
amount and timing of any liquidating distributions, due in part
to its inability to predict the net value of its non-cash assets
and the ultimate amount of its liabilities, many of which have
not been settled. In addition, the Company is currently unable
to predict the precise timing of any liquidating distributions
pursuant to the plan of liquidation. The timing of any
distributions will be determined by the Company's Board of
Directors and will depend in part upon its ability to convert
its remaining assets into cash and pay and settle its
significant remaining liabilities and obligations, including
contingent claims.
ADVANTICA RESTAURANT: Posts Same-Store Sales for March Quarter
--------------------------------------------------------------
Advantica Restaurant Group, Inc. (OTCBB: DINE) reported same-
store sales for company-owned restaurants during the five-week
period and quarter ended March 27, 2002, compared with the same
periods in fiscal year 2001.
Five Weeks 13 Weeks
Mar. 2002 Q1-2002
---------- ----------
Same-Store Sales
Denny's 0.0% (0.1%)
Coco's (4.5%) (6.3%)
Carrows (0.1%) (1.6%)
Guest Check Average
Denny's 1.3% 1.2%
Coco's 2.3% 2.6%
Carrows 2.3% 1.7%
Included below are the Company's restaurant counts at the end of
March, compared with year end 2001.
Restaurant Units 3/27/02 12/26/01
------- --------
Denny's
Company-owned 602 621
Franchised 1,108 1,114
Licensed 14 14
------- --------
1,724 1,749
Discontinued Operations:
Coco's
Company-owned 137 139
Franchised 38 38
Licensed 295 298
------- --------
470 475
Carrows
Company-owned 109 112
Franchised 29 30
------- --------
138 142
------- --------
2,332 2,366
======= ========
Advantica Restaurant Group, Inc. is one of the largest
restaurant companies in the United States, operating over 2,300
moderately priced restaurants in the mid-scale dining segment.
Advantica owns and operates the Denny's, Coco's and Carrows
restaurant brands. FRD Acquisition Co., the parent company of
Coco's and Carrows and a wholly owned subsidiary of Advantica,
is classified as a discontinued operation for financial
reporting purposes and is currently under the protection of
Chapter 11 of the United States Bankruptcy Code effective as of
February 14, 2001. For further information on the Company,
including news releases, links to SEC filings and other
financial information, please visit Advantica's Web site at
http://www.advantica-dine.com
AMERALIA: Nasdaq Extends Listing of Shares on SmallCap Market
-------------------------------------------------------------
AmerAlia, Inc. (Nasdaq: AALA) has received notification from the
Nasdaq Stock Market that it has extended AmerAlia's listing on
the SmallCap market subject to:
(A) AmerAlia's Form 10-Q for the quarter ended March 31,
2002 must be filed on or before May 15, 2002, and
must demonstrate net tangible assets of at least
$2,000,000 and/or shareholders' equity of at least
$2,500,000; and
(B) On or before August 14, 2002, AmerAlia must
demonstrate a closing bid price for its common stock
of at least $1.00 per share, and immediately
thereafter AmerAlia must evidence a closing bid price
of at least $1.00 per share for a minimum of ten days.
AmerAlia anticipates that its Form 10-Q report for the March 31,
2002, quarter will comply with the first Nasdaq requirement
stated above. While AmerAlia is hopeful that the price for its
common stock will respond to AmerAlia pursuing its business
plan, AmerAlia has no control over the market for its common
stock.
At December 31, 2001, AmerAlia reported a working capital
deficit of about $13 million.
AMERALIA: Bank of America Extends Loan Maturity to June 30, 2002
----------------------------------------------------------------
AmerAlia has paid the Bank of America, N.A. interest for its
existing loan of approximately $10,000,000, and has, with the
consent of the Jacqueline Badger Mars Trust (a principal
shareholder of AmerAlia and guarantor of the repayment of the
loan, the "Trust") extended the due date of the loan until June
30, 2002.
AmerAlia received approximately $600,000 funds from a new loan
from the Harris Bank as a result of a loan guaranty made by two
accredited investors who are existing shareholders of AmerAlia -
Robert C. Woolard and Charles D. O'Kieffe. The funds were used
to repay an existing obligation of $100,000 due to Messrs.
O'Kieffe and Woolard, and pay fees and interest in advance for
three months (approximately $120,000) on AmerAlia's $10,000,000
loan from Bank of America that is guaranteed by the Trust,
resulting in net proceeds to AmerAlia of approximately $380,000.
The Company intends to use the net proceeds to reduce certain
existing obligations to creditors and officers and directors and
for working capital purposes in connection with the negotiation
of its debt facility, equity investment, and the construction of
a plant on its Rock School lease or the possible acquisition of
neighboring sodium bicarbonate production assets.
AmerAlia entered into guaranty agreements with both of Messrs.
O'Kieffe and Woolard on the one hand, and the Trust on the other
by which AmerAlia agreed to pay them a fee for guaranteeing the
bank loans in an amount equal to 1.0833% of the amount of the
loans received per month while the loans are outstanding. This
compensation will be payable in shares of AmerAlia's restricted
common stock valued at $1.00 per share, subject to readjustment.
ARTHUR ANDERSEN: Canadian Partners to Join Deloitte & Touche
------------------------------------------------------------
Deloitte & Touche LLP signed an agreement with Andersen Canada
under which partners and staff from Andersen will join Deloitte
& Touche. The transaction is subject to a due diligence review,
partner approvals and regulatory approval.
"This is a very exciting transaction for Deloitte and our
people. Both firms have outstanding professionals and the
transaction will offer even greater development opportunities
for all of our people," stated Colin Taylor, Chief Executive and
Managing Partner of Deloitte & Touche LLP.
Both practices will operate under the Deloitte & Touche name
with full integration into Deloitte & Touche as quickly as
possible.
Under the terms of the agreement, the Andersen partners and
staff will follow Deloitte & Touche's policies and procedures as
well as all of its global systems and protocols. Colin Taylor
will remain in his chief executive role and a number of Andersen
partners will join the Board and management at Deloitte &
Touche.
Russel Robertson, Andersen Canada's CEO and Managing Partner
added "Our Canadian clients have shown great loyalty to us. As
part of Deloitte & Touche, we can provide them with additional
confidence that they can be served by world-class professionals
with a global network to match."
According to Mr. Taylor, "Our commitment to Canada and to
Canadian business is made even stronger by the combined strength
of the outstanding professionals who serve our clients with
quality and integrity every day."
BULL RUN: Lenders Amend and Extend Credit Facility to June 28
-------------------------------------------------------------
On April 8, 2002, Bull Run Corporation and its lenders amended
the Company's bank credit facility in order to, among other
things, change the facility's maturity date from March 29, 2002
to June 28, 2002, waive certain specified events of default and
waive the lenders rights and remedies under the credit facility
pertaining to the specified events of default.
The Company believes that it will be able to reach an acceptable
agreement with its bank lenders on the terms of a long-term
refinancing of the credit facility prior to the facility's new
maturity date. As disclosed in the Company's Form 10-Q for the
period ended December 31, 2001, a long-term refinancing of the
credit facility may involve a significant reduction in the total
amount of financing available from the bank lenders, and the
Company believes it has the ability to successfully achieve such
a reduction within a time frame acceptable to its bank lenders.
The Company has reduced its bank term debt by over $20 million
during the current fiscal year as a result of the sale of
certain investment assets and the issuance of new equity to
affiliated parties.
Bull Run formerly relied on its Datasouth Computer subsidiary --
which makes heavy-duty dot matrix and thermal printers -- for
nearly all of its sales. Bull Run sold Datasouth in late 2000
and now concentrates on its Host Communications sports and
affinity marketing unit. It provides consulting; event hosting;
member communication and recruitment; publishing; TV, radio, and
Internet program production; and other services to college and
high school sports teams, athletic conferences, and
associations. Clients include the National Collegiate Athletic
Association and the National Federation of State High School
Associations.
CJF HOLDINGS: Trustee Gets Court Approval to Hire McShane Group
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware gives its
approval to Mr. Michael B. Joseph, the Interim Trustee
overseeing the chapter 7 cases of CJF Holdings and affiliated
debtors, to employ McShane Group as his liquidation consultant,
nunc pro tunc to February 22, 2002.
As Liquidation Consultant to the Chapter 7 Trustee, McShane is
expected to:
a) gather the Debtors' books and record and arrange for
transfer for same to a site to be designated/agreed upon
by the Chapter 7 Trustee;
b) inventory the Debtors' books and records;
c) ascertain the status of the Debtors' books and records,
i.e., the months through which the books have been
closed;
d) inventory the Debtors' fixed assets;
e) meet with and advise the Chapter 7 Trustee/Counsel on
matters concerning case administration that require
their specific view;
f) render such other assistance as the Chapter 7
Trustee/his Counsel may deem appropriate;
g) perform preference analyses and any other analyses as
required by the Chapter 7 Trustee;
h) research, pursue and collect funds owed to the Debtors;
i) arrange for contingency audits on worker's compensation
insurance policies and sales tax, to the extent
feasible;
j) administer and handle the claims process; and
k) assist with any other matters the Chapter 7 Trustee, in
his discretion, deems appropriate.
The Chapter 7 Trustee agrees to compensate McShane at its hourly
rates:
Managing Directors $225 per hour
Senior Analysts $175 to $200 per hour
Administrative Support $50 per hour
CJF Holdings, Inc. filed for voluntary chapter 11 protection on
November 28, 2001 and receives Court approval to convert these
case to chapter 7 under the U.S. Bankruptcy Court on February 8,
2002. Donna L. Harris, Esq. at Morris, Nichols, Arsht & Tunnell
represents the Debtors in their restructuring effort. When the
company filed for protection from its creditors, it listed an
estimated assets and debts of $10 million to $50 million.
CENTRAL EUROPEAN MEDIA: Shareholders' Meeting Set for May 15
------------------------------------------------------------
The Annual General Meeting of Shareholders of Central European
Media Enterprises Ltd., a Bermuda company, will be held at the
offices of Conyers Dill & Pearman, Clarendon House, 2 Church
Street, Hamilton, Bermuda, on May 15, 2002 at 10:00 A.M., for
the following purposes:
1. To elect eight directors to serve until the next Annual
General Meeting of Shareholders;
2. To consider and act upon an amendment to the Company's
By-laws concerning the indemnification provided by the
Company to the Company's current and former directors
and officers;
3. To consider and act upon an amendment to the Company's
By-laws to authorize the Company's Board of Directors in
its discretion and from time to time, to issue
additional shares of the Company's Class A common stock,
par value $0.08 per share, and Class B common stock, par
value $0.08 per share to the Company's shareholders as a
share dividend;
4. To consider and act upon an amendment to the Company's
By-laws authorizing the Company's Board of Directors to
fill any vacancy in the office of the Company's
auditors;
5. To receive and adopt the financial statements of the
Company for the Company's fiscal year ended December 31,
2001, together with the auditors' report thereon; and
6. To appoint Arthur Andersen as auditors for the Company
and to authorize the directors to approve their fee.
The approval and adoption of each matter to be presented to the
shareholders is independent of the approval and adoption of each
other matter to be presented to the shareholders. Only
shareholders of record at the close of business on April 1, 2002
are entitled to notice of and to vote at the meeting.
Central European Media Enterprises Ltd. (CME) is a TV
broadcasting company with leading stations located in Romania,
Slovenia, Slovakia and Ukraine. CME is traded on the Over the
Counter Bulletin Board under the ticker symbol "CETVF.OB". At
September 30, 2001, the company had a total shareholders' equity
deficit of about $85 million.
COMDISCO INC: Wants to Assume & Assign Healthcare Pacts to GECC
---------------------------------------------------------------
In connection with the sale of the Healthcare Business,
Comdisco, Inc., and its debtor-affiliates also seek the Court's
authority to assume and assign certain assumed contracts to GE
Capital Corporation or the Successful Bidder.
According to John Wm. Butler, Esq., at Skadden, Arps, Slate,
Meagher & Flom, in Chicago, Illinois, the Debtors served on each
party to an Assumed Contract a cure and assumption notice on
April 2, 2002. The notice states the cure amount that the
Debtors believe is necessary to assume such contract or lease.
Mr. Butler emphasizes that objections to the proposed Cure
Amounts must be filed by April 15, 2002. Objections must
specify what cure the party to the Assumed Contract believes is
required. Appropriate documentation supporting such claim must
also be included. "If no objection is timely received, the Cure
Amount set in the Cure Notice will be controlling and the party
to the Assumed Contract will be forever barred from asserting
any other claim arising prior to the assignment against the
Debtors or the Purchaser," Mr. Butler says. (Comdisco Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
COVANTA ENERGY: Wins Nod to Pay Critical Vendors and Suppliers
--------------------------------------------------------------
Covanta Energy Corporation and its debtor-affiliates believe
that certain vendors and service providers are critical to the
continued viability of their businesses. The Debtors ask the
Bankruptcy Court for permission (but no obligation) to honor and
pay pre-petition claims owed to vendors they deem critical.
Some of the goods and services Critical Vendors provide are
necessary for the Debtors' compliance with federal and state
regulatory requirements. Others are one-of-a-kind goods and
services not attainable through another supplier or
prohibitively expensive to obtain elsewhere.
The Critical Vendor Claims are comprised of:
Regulatory Compliance Vendors
Deborah M. Buell, Esq. at Cleary, Gottlieb explains that in
order to comply with applicable governmental laws and
regulations, they are assisted by a number of Critical Vendors.
For example, she relates, the Debtors rely on certain disposal
companies to remove a variety of regulated waste from Debtors'
facilities and also on vendors who perform emission testing.
The Debtors fear that some of these Critical Vendors will refuse
their services if their pre-petition claims are not paid,
exposing the Debtors to government-imposed fines or penalties,
which could lead to closure of facilities. Proper,
uninterrupted waste disposal protects the environment, benefits
public health, and would protect the health and safety of the
Debtors' employees.
For these reasons, the Debtors are convinced that their ability,
in their sole discretion, to pay the Regulatory Compliance
Vendors is essential to their reorganization efforts.
As of the Petition Date, they estimate that the aggregate amount
of pre-petition claims held by these vendors is approximately
$2,200,000.
Unique Vendors
Certain material goods and services required for the continued
operations or construction of the Debtors' energy plants and
other facilities are unique and cannot be readily provided by
more than one vendor or cannot be replaced quickly enough to
prevent disruption or facility shut down. These Vendors are
unlikely to provide post-petition goods and services if their
pre-petition claims are not paid. Viable alternatives to current
Unique Vendors of critical chemicals, proprietary software and
the like are not available without serious operations
disruption.
The Debtors require the authority, but not the obligation to
satisfy these Unique Vendor claims to ensure their continued,
uninterrupted service.
The Debtors estimate that the aggregate pre-petition Unique
Vendor claims, as of the Petition Date, is approximately
$2,800,000.
Equipment Maintenance Vendors
Ms. Buell continues that to ensure that energy production and
waste processing equipment, including boilers, in the Debtors'
facilities function at peak efficiency, they must be taken off
line twice a year for maintenance, cleaning and repair. This off
line maintenance lasts 24 hours a day, seven days a week, for
approximately one to two weeks. While the maintenance work is
being done, the boiler is inoperable and the facility runs at
diminished capacity. Virtually every day a number of boilers are
under maintenance and the list changes daily as maintenance is
finished at one site and begins at another and unscheduled
maintenance becomes necessary.
Maintenance completion and continuance at the Debtors'
facilities is crucial for the Debtors' businesses to continue
functioning. If certain of these Equipment Maintenance Vendors
refuse to provide continued performance, loss of revenue,
unscheduled equipment downtime, and unfinished maintenance will
result in breaches of contract in regard to waste tonnage
processing and electrical output the Debtors are obligated to
produce. Delays would significantly damage the Debtors' efforts
to maximize cashflow at this critical time.
The Debtors require the authority, thought not the obligation,
to satisfy the estimated aggregate prepetition EMV claims of
approximately $2,000,000.
Common Carrier Vendors
The Debtors' Common Carrier Vendors store, ship, transport, and
deliver the supplies and materials used in the Debtors'
businesses.
The Debtors estimate that the value of the supplies and
materials in possession of the Common Carrier Vendors exceeds
the pre-petition amounts owed them. These Vendors could refuse
to deliver the supplies and materials in their possession if
their pre-petition claims are not paid. Ms. Buell explains that
the supplies and materials the Common Carriers have will be
subject to possessory liens under applicable state law. The
Debtors believe that they must have the authority, but not the
obligation, to satisfy the Common Carrier claims to ensure that
they have access to these valuable assets. These supplies are
essential to the Debtors' business and reorganization efforts.
The Debtors estimate the aggregate amount of Common Carrier
Claims, at the Petition Date, is approximately $50,000.
Ms. Buell states the Debtors will use their best efforts to
ensure continued work by the Critical Vendors without the
necessity of satisfying their pre-petition claims. Where those
efforts fail, and to achieve critical services in a timely way,
the Debtors plan to adhere to the proposed Payment Conditions,
including letter agreements as appropriate. This will ensure
that the Critical Vendors continue to provide post-petition
goods and services to the Debtors on favorable terms.
The Debtors wish to maintain their Critical Vendors' confidence,
and the payment of the Vendors' claim, in the Debtors' sole
discretion, is essential and appropriate.
Therefore, the Debtors ask Judge Blackshear to approve an order:
(a) authorizing, but not obligating, the Debtors to continue
to process and pay Critical Vendors, totaling not more
than $7 million. These payments are for critical goods
and services during the ordinary course business
including those for goods and services received by the
Debtors pre-petition, conditioned on the agreement of a
particular Critical Vendor to provide post-petition goods
and services on trade terms acceptable to the Debtors;
(b) that until Critical Vendors agree to the Payment
Conditions and are subsequently paid, the Critical
Vendors may not exercise any claimed rights of setoff or
offset of amounts against any pre-petition deposit
without relief from the automatic stay, as specified in
Section 362(a)(7) of the Bankruptcy Code;
(c) authorizing and directing applicable banks and other
financial institutions to receive, process and pay any
and all checks and other transfers related to the
Critical Vendor Claims; and,
(d) granting such other and further relief as is just and
proper.
Judge Blackshear, finding merit in the Debtors' request and
believing it is in the best interest of the Debtors' estates,
creditors and parties in interest granted the Motion. The
Debtors are allowed, in their discretion and without further
delay, to take any action and perform any act authorized under
his order. (Covanta Bankruptcy News, Issue No. 2; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
DIEDRICH COFFEE: Working Capital Deficit Tops $3.6 Million
----------------------------------------------------------
Diedrich Coffee Inc. (Nasdaq:DDRX), roaster, retailer and
wholesaler of specialty grade coffee, reported results from
operations for its third fiscal quarter ended March 6, 2002.
According to recently appointed chief executive officer Phil
Hirsch: "The company has reached the point where we can now
begin to take advantage of opportunities to grow in each of our
channels of distribution, both domestically and internationally.
As we complete our recent restructuring initiatives, which
include the sale of underperforming company-owned locations and
the improvement of business fundamentals, we intend to begin
investing strategically to maximize growth opportunities."
Profitability and Operating EBITDA
The company reported a net loss of $190,000 for the quarter
ended March 6, 2002 compared with a net loss of $632,000 for the
same quarter a year ago. The loss per share was reduced to $0.04
from $0.20 per share for the prior year period. This improvement
resulted primarily from significant reductions in operating
expenses and other expenses (depreciation and amortization,
interest expense and losses on sale of assets). Additionally, as
previously announced, the company recorded a $367,000
restructuring charge during the current year quarter. This
charge was less than a similar restructuring charge taken in the
prior year. These improvements were partially offset by a third
quarter charge of $297,000 resulting from a malfunction in a
manufacturing process referred to below. It should also be noted
that the weighted average number of shares for the quarter ended
March 6, 2002 was 2 million higher than during the previous year
period, which diluted the loss per share by approximately $0.02.
Operating EBITDA (earnings before interest, taxes, depreciation
and amortization, and adding back any provisions for asset
impairment or restructuring costs) declined 47.8% to $812,000
for the quarter versus $1,556,000 for the prior year period.
Operating EBITDA declined due to the planned sale or closure of
a number of retail units, including the sale of Coffee
Plantation coffeehouses in Arizona, lower comparable store
sales, and the manufacturing related charge noted above. For the
three quarters ended March 6, 2002, the company reported net
income of $599,000, compared with a net loss of $1.6 million for
the same period a year ago. Operating EBITDA declined 8.8% to
$3.1 million for the three quarters versus $3.4 million for the
prior year period for the reasons discussed above.
At March 6, 2002, Diedrich Coffee reported a working capital
deficit of about $3.6 million.
Revenue
Total revenue for the quarter ended March 6, 2002 was $13.1
million, a 17.5% decrease compared with revenue of $15.8 million
for the prior year period. This decrease consists of a 23.2%
decline in retail sales and a 9.5% decrease in wholesale and
other revenue, partially offset by a 6.6% increase in franchise
revenue.
Retail sales from company-owned retail units for the quarter
declined by $2.6 million, or 23.2% compared with the prior year
period. Planned closings or sales of underperforming company-
owned locations caused the majority of this decrease. The
balance of the reduction was due to a 1.9% decline in comparable
company store sales, a smaller decline than experienced during
the first two quarters of the fiscal year.
Wholesale revenue for the quarter decreased $0.3 million or 9.5%
from the prior year period. This decrease is primarily
attributable to lower roasted coffee sales to franchisees, which
resulted from fewer domestic Gloria Jean's franchise units and
lower comparable store sales. Franchise revenue for the third
fiscal quarter increased to $1.7 million from $1.6 million in
the prior year due to new international franchise openings and
domestic renewal fees.
For the three quarters ended March 6, 2002, total revenue was
$43.2 million, a 17.1% decrease compared with revenue of $52.1
million for the prior year period. This decrease consists of a
19.4% decline in retail sales, a 16.8% decline in wholesale and
other revenue, and a 2.6% decrease in franchise revenue compared
with a year ago. Retail sales for the three quarters declined
for primarily the reasons noted above regarding the quarterly
decrease. Wholesale revenue for the three quarters declined from
the prior year period due to the decision to discontinue the
distribution of lower-margin non-coffee products to franchisees
and to a decrease in coffee bean sales. Franchise revenue for
the three quarters declined compared with the prior year period
as a result of fewer initial franchise fees recorded.
Comparable Store Sales
System-wide comparable store sales at Diedrich Coffee brand
coffeehouses open at least one year declined 2.4% for the
quarter, as compared with the prior year, while comparable store
sales at the company's Coffee People coffeehouses declined 1.3%
during this same period. For both brands, this is a smaller
decline than was experienced in the first two quarters of the
fiscal year. For the three quarters, system-wide comparable
store sales at Diedrich Coffee brand coffeehouses open at least
one year declined 3.7% versus prior year, and Coffee People
coffeehouses declined 3.8% for the same period.
System-wide comparable store sales at Gloria Jean's units
declined 2.3% during the third quarter compared with the same
period last year. For the three quarters ended March 6, 2002,
Gloria Jean's system-wide comparable store sales declined 4.6%.
Recent Developments
Diedrich Coffee recently became aware of a potential product
failure in its Keurig(TM) K-cup(TM) line related to a limited
quantity of inventory shipped to distributors during the third
fiscal quarter. K-cups are a patented single serve brewing
technology that the company manufactures and sells to the office
coffee service market under a licensing agreement with Keurig
Inc. Diedrich Coffee immediately notified its Keurig
distributors and offered to replace certain effected inventory
previously shipped to them. This action resulted in a third
quarter charge of $297,000 related to the inventory subject to
return. Accordingly, no third quarter revenue has been recorded
for these shipments. The potential product failure resulted from
a malfunction in the manufacturing process that is now fully
resolved. The company remains committed to Keurig's high-quality
single-serve brew system and its unique technology, as it allows
Diedrich Coffee to deliver an exceptional cup of coffee to the
office environment.
With headquarters in Irvine, Diedrich Coffee specializes in
sourcing, roasting and selling the world's highest quality
coffees. The company's two primary brands are Diedrich Coffee,
with retail coffeehouses primarily in California, Colorado and
Texas, and Gloria Jean's Coffees, the nation's leading retail
chain of mall-based coffee stores. The company's 369 retail
outlets, the majority of which are franchised, are located in 37
states and 11 foreign countries. Diedrich Coffee also sells its
coffees through more than 390 wholesale accounts including
office coffee service distributors, restaurants and specialty
retailers, and via mail order and the Internet. For more
information about Diedrich Coffee, call 800/354-5282, or visit
the company's Web sites at http://www.diedrich.comand
http://www.gloriajeans.com
DOLLAR GENERAL: Says Moody's Downgrade Unreflective of Profile
--------------------------------------------------------------
Officials at Dollar General Corporation (NYSE: DG) responded to
Moody's Investors Service's downgrade of Dollar General's long-
term rating from Ba1 to Ba2.
"We are disappointed by Moody's decision," said Jim Hagan,
Dollar General executive vice president and chief financial
officer. "Based on the strength of our recent financial
performance and our solid cash flow, we believe this downgrade
by Moody's does not reflect the underlying strength of the
Dollar General business model. For the year ended February 1,
2002, Dollar General generated $497 million in earnings before
interest, taxes, depreciation and amortization, and we earned
net income of $207.5 million. We expect continued earnings
growth in Fiscal 2002. To us, those kinds of results and
expectations are incompatible with the action taken by Moody's.
"While we have candidly acknowledged that our infrastructure was
strained by our growth during the last ten years, we believe
that the necessary initiatives are underway to strengthen our
infrastructure to support the continued growth of the Company,"
Hagan said. "These initiatives were outlined in detail during
the company's March 26, 2002 analyst meeting and in the report
on Form 8-K filed on the same date."
DYNASTY COMPONENTS: Gets Extension of CCAA Protection to May 30
---------------------------------------------------------------
Dynasty Components Inc. (TSE:DCI) has obtained a 45 day
extension of its protection under the Companies' Creditors
Arrangement Act in order to continue its restructuring process.
The effect of the Order is to continue the stay of proceedings
in respect of claims existing against the Company as at Friday,
November 30, 2001 until Thursday, May 30, 2002.
In December 2001, DCI embarked on a business strategy focused
entirely on the provision of specialized e-procurement and
logistics management services through its wholly-owned
subsidiary, Parts Logistics Management Corp. Acquired by DCI in
May 2001, PLM Corp. provides logistics solutions to Information
Technology outsourcing service providers to assist them in
managing the procurement, delivery and tracking of mission
critical IT parts, as well as parts disposition and logistics
management services to computer original equipment
manufacturers. DCI trades on The Toronto Stock Exchange under
the symbol "DCI". For more information visit our Web site at
http://www.dcicorporate.com
EOTT ENERGY: Bank Extends Credit Facility Until May 31, 2002
------------------------------------------------------------
EOTT Energy Partners, L.P. (NYSE: EOT) received an immediate
extension of its existing working capital and letter of credit
facilities from Standard Chartered Bank from April 30, 2002
until May 31, 2002, while documentation of the term facilities
is pending completion. Once documentation is complete, the
credit facilities will be available through the end of February
2003 for working capital loans and for the issuance of letters
of credit of up to $300 million. The credit facilities are
scheduled to close on or about April 23, 2002.
"We are pleased with Standard Chartered Bank's continuing
support and confidence in EOTT's operations," said EOTT
President and Chief Executive Officer, Dana Gibbs. "In working
to resolve the various uncertainties communicated by us in
recent months, obtaining a term extension of our credit
facilities was one of our highest priorities. The immediate
extension of one month gives us the time to conclude our
documentation while continuing our business activities. We feel
this agreement will reduce the credit support concerns of our
suppliers and enhances the long-term strength of our various
businesses."
EOTT Energy Partners, L.P. is a major independent marketer and
transporter of crude oil in North America. EOTT transports most
of the lease crude oil it purchases via pipeline, which includes
8,000 miles of active intrastate and interstate pipeline and
gathering systems. In addition, EOTT owns and operates a
hydrocarbon processing plant and a natural gas liquids storage
and pipeline grid system. EOTT Energy Corp. is the general
partner of EOTT with headquarters in Houston. EOTT's Internet
address is http://www.eott.com The Partnership's Common Units
are traded on the New York Stock Exchange under the ticker
symbol "EOT".
At September 30, 2001, EOTT Energy's total current liabilities
exceeded its total current liabilities by about $178 million.
EASYRIDERS INC: Hearing on Nomura Settlement Pact Set for May 1
---------------------------------------------------------------
Easyriders Inc., the publisher of the eponymous motorcycle
magazine and its related biker titles, may soon emerge from
bankruptcy. The Agoura Hills, California-based publisher of
Easyriders and Tattoo, reached a settlement on Friday with
Nomura America Holdings Inc., its largest secured lender.
According to the Deal, the settlement allows its owner and
original founder, Joe Teresi, to buy the company back for $5.25
million in cash, said Easyriders' lawyer, David Golubchik.
Nomura would also waive about $23 million in total debt that
both it and Teresi are owed, Golubchik said.
The settlement is scheduled for a hearing on May 1 in the U.S.
Bankruptcy Court for the Central District of California,
reported the newspaper. If the settlement agreement receives
court approval, the company plans to come out of bankruptcy with
all its current magazine titles intact. Easyriders filed for
bankruptcy protection last July. (ABI World, April 10, 2002)
ENRON CORP: ENA Selling Keyspan Gas Contract for $5.7 Million
-------------------------------------------------------------
Enron North America is contractually obligated through October
2005 to sell and deliver up to 50,000 mmbtu per day to KeySpan
Gas East Corporation, doing business as KeySpan Energy Delivery
Long Island, at multiple delivery points in the Texas and
Louisiana production area on the Transco, Tennessee and TETCO
interstate pipelines.
Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New
York, informs Judge Gonzalez that Enron North America failed to
perform under the Gas Contract beginning in late November 2001.
This led KeySpan to initiate a contract stipulated 30-day
negotiation period during which Enron North America had the
ability to cure its defaults, Mr. Rosen relates. After
negotiations, Mr. Rosen relates, KeySpan extended the right to
cure until May 1, 2002 and advised Enron North America that an
assignment of the Gas Contract to one of a number of specified
entities would qualify as a cure.
Since February 15, 2002, Mr. Rosen tells the Court that Enron
North America has been seeking to sell and assign its
prospective rights in the Gas Contract. To obtain the highest
and best offer, Mr. Rosen recounts that Enron North America
conducted a sealed bid auction, via Dealbench, a secured Web
site, and received seven bids. According to Mr. Rosen, Enron
North America provided relevant information to potential
purchasers and responded to all inquiries regarding the Gas
Contract.
Of the seven initial bids, Enron North America selected the top
two and immediately began negotiations with each party over the
terms of a Gas Contract Purchase and Sale Agreement. After
extensive negotiations with both parties and in consultation
with its financial advisors, Enron North America concluded that
El Paso Merchant Energy, L.P. had submitted the highest and best
offer.
Under the terms of the Gas Contract Purchase and Sale Agreement,
Enron North America will assign, sell, transfer and set over to
El Paso Merchant Energy, L.P. its rights, titles, benefits,
privileges and interests in and to the Gas Contract arising on
and after the Service Date. The sale, assignment and transfer of
the Gas Contract shall be, except for the limited
representations and warranties, "as is where is and with all
faults."
The salient terms of the Sale Agreement are:
Purchase Price: $5,694,000 based on a May 1, 2002 Service Date,
as adjusted.
Purchase Price
Adjustments: The Initial Purchase Price is adjusted as:
Value Adjustment -- The Initial Purchase Price
is based on the Buyer's valuation of
the Master Agreement as of March 11, 2002,
based on market prices. The Parties agree that
the simple average of the NYMEX contracts from
May 2002 to October 2005 was $3.60m/mmbtu as of
March 11, 2002.
The Purchase Price is calculated as:
a) After the Bankruptcy Court approval becomes
final and non-appealable, each Party
calculates the Final Average NYMEX Price
(simple average) on the close of business
that same day within 2 hours after the
closing of the New York Mercantile Exchange.
b) The Initial Purchase Price is increased
or decreased, as appropriate, by $15,000 for
each $.01/mmbtu difference between the
Initial Average NYMEX Price and the Final
Average NYMEX Price.
Resolution of
Price Adjustment
Disputes: If a written notice of disagreement or dispute
over Purchase Price Adjustment delivered by one
party to the other, then the Parties use
good-faith efforts to resolve the dispute. If
any dispute cannot be resolved before the
scheduled Closing Date, then the parties shall
proceed with the Closing and the Buyer pays
based on the Buyer's good faith calculation of
the Purchase Price Adjustment until such amount
may be resolved following the Closing Date
pursuant to the dispute resolution process of
the Gas Purchase and Sale Agreement. If, after
the dispute resolution process, the Buyer is
deemed to owe the Seller an additional amount
of money, the Buyer pays the additional amount
of money to the Seller by wire transfer within
10 days after the completion of the dispute
resolution process, including interest
calculated at the prime rate on the date the
dispute is finally determined.
Closing Date: The closing of the transaction contemplated
under the Sale Agreement will take place at
10:00 a.m., Central Time, in the offices of the
Seller, on the first Business Day following the
date that is the later to occur of:
a) the expiration of the ten-day period
following the entry by the Bankruptcy Court
of the Bankruptcy Court Order, and
b) the satisfaction or waiver of all Closing
Conditions, or at such other place and date
as may be agreed by the Parties.
Fees & Expenses: Except as otherwise expressly provided in the
Sale Agreement, all fees and expenses,
including fees and expenses of counsel,
incurred in connection with the Sale Agreement
and the transactions contemplated under it are
paid by the party incurring such fees or
expenses.
Transfer Taxes: All sales, use, transfer, filing, recordation,
registration and similar Taxes and fees arising
from or associated with the transactions
contemplated under the Sale Agreement are borne
by the Buyer, unless the taxes are specifically
levied under Applicable Law on the Seller, and
each party files all necessary documentation
with respect to, and make all
payments of, such Taxes and fees imposed on it
on a timely basis.
Excluded Assets: Notwithstanding anything set forth in the Sale
Agreement to the contrary, the Buyer has no
rights as a result of the Sale Agreement to
any assets of any kind other than the Gas
Contract, including, without limitation, rights
(including indemnification) and claims and
recoveries of the Seller against third parties
arising out of or relating to events prior to
the Service Date with respect to the Gas
Contract; tradenames, trademarks, service marks
or logos owned by the Seller or its Affiliates;
accounts receivable or amounts due or owing or
accrued on account of goods sold or services
performed under the Gas Contract before the
Service Date; and all other assets and
properties owned by the Seller or its
Affiliates.
Contract
Liabilities: The Buyer assumes and agrees to pay, perform
and discharge when they become due and payable,
or are required to be performed, all
Liabilities of Seller under the Gas Contract
arising out of or relating to events on or
after the Service Date; including, without
limitation, any charges, fees, Taxes,
assessments, adders or surcharges imposed or
authorized by any Governmental Entity
after the Service Date as defined in the Sale
Agreement. Seller remains responsible for any
charges, fees, Taxes, assessments, interest
penalties, adders or surcharges imposed or
authorized retroactively by any Governmental
Entity for periods prior to the Service Date.
Contract Liabilities shall exclude, without
limitation, all accounts payable or Liabilities
on account of goods sold or not sold or
services performed or not performed under the
Gas Contract before the Service Date. The Buyer
does not assume and has no liability for any
Liabilities of the Seller other than the
Contract Liabilities.
Buyer's
Indemnification: From and after the Service Date, the Buyer
immediately indemnifies and holds Seller, its
respective affiliates, and their respective
officers, directors, shareholders, employees,
agents, successors and permitted assigns
harmless from and against any and all claims,
liabilities, losses, costs, damages and
expenses, including, without limitation, court
costs and reasonable attorney's fees and
expenses arising out of or resulting from the
Contract Liabilities, or any breach by Buyer of
its covenants and agreements in this Agreement
on or after the Service Date.
Termination: The Sale Agreement may be terminated at any
time prior to the Closing Date solely as:
-- either by the Seller or the Buyer, if the
motion for the Proposed Bankruptcy Order has
been rejected by an order of the Bankruptcy
Court;
-- by the Seller, if the Proposed Bankruptcy
Order, or a similar Bankruptcy Order
satisfactory to the Seller acting in good
faith and exercising commercially reasonable
judgment, has not been entered by the
Bankruptcy Court on or before May 1, 2002;
-- by the Buyer, if the Proposed Bankruptcy
Order, or similar Bankruptcy Order
satisfactory to the Buyer acting in good
faith and exercising commercially reasonable
judgment, has not been entered by the
Bankruptcy Court on or before May 1, 2002.
-- by mutual written consent of the Seller and
the Buyer;
-- by the Seller or by the Buyer, if a material
breach or default shall be made by the other
Party in the observance or in the due and
timely performance of any of the covenants
or agreements contained herein, and the
curing of such default shall not have been
made within 10 days after written notice
thereof is delivered to the breaching or
defaulting party by the other party;
-- by the Seller or the Buyer, if a
Governmental Entity has issued a non-
appealable order, decree or ruling or taken
any other action, which permanently
restrains, enjoins, or otherwise prohibits
the transactions contemplated by this
Agreement;
-- by the Seller or the Buyer, if the Closing
has not occurred on or before May 31, 2002.
By this motion, Enron North America asks the Court to approve
the Sale Agreement with El Paso Merchant Energy, L.P., as well
as the assumption, assignment and sale of its interests in the
Gas Contract, free and clear of all liens, claims, encumbrances
and interests pursuant to the Assignment and Assumption
Agreement. (Enron Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ENRON: Klayman Commences Probe for Broker-Dealer Liability
----------------------------------------------------------
The Law Firm of Klayman & Toskes, P.A., has commenced an
investigation on behalf of UBS/PaineWebber (NYSE: UBS) customers
who owned Enron (OTC Pink Sheets: ENRNQ.PK) (NYSE: ENE) stock
and options. On December 2, 2001, Enron filed a voluntary
petition for relief under chapter 11 of the Bankruptcy Code in
the United States Bankruptcy Court for the Southern District of
New York. A lawsuit was filed on March 26, 2002, against
UBS/PaineWebber, Cause No. 02-0851.
Klayman & Toskes, P.A. believes that most investors in Enron
have incurred substantial losses on their investment. Investors
may be able to recover their losses from the brokerage firms
that provided recommendations and/or advice to its customers in
regard to their holdings in Enron. Investors should know that
they have legal rights against the brokerage firm from whom they
held or purchased Enron stock and options.
"The sole purpose of this release is to investigate, on behalf
of our clients, sales practice violations of licensed brokers at
major investment firms. The firm is investigating securities
violations, including the misuse of margin, the misuse of stock
option plans, failure to supervise, unsuitability claims,
misrepresentation and material admissions of fact, unauthorized
transactions, and excessive trading/churning of customers'
accounts. We would greatly appreciate any information from
customers concerning the method or process used by brokerage
firms with regard to the handling of their accounts," Klayman
says.
Klayman & Toskes, P.A. has offices in California, Florida and
New York and represents investors throughout the nation. If you
wish to discuss this announcement or have information relevant
to this matter, please contact Lawrence L. Klayman, Esquire of
Klayman & Toskes, P.A., 888-997-9956, or visit us on the Web at
http://www.nasd-law.com
ENRON CORP: Judge Gonzalez Moves Dynegy Lawsuit to Houston
----------------------------------------------------------
Judge Arthur Gonzalez of the U.S. Bankruptcy Court of the
Southern District of New York has ruled that Enron's adversary
proceeding against Dynegy be moved to the federal court in
Houston, where Judge Melinda Harmon will oversee the
proceedings.
Dynegy appreciates Judge Gonzalez's careful and reasoned
approach to ruling on the change of venue issue. The company
believes that moving the proceedings to Houston will provide all
parties involved with the most efficient and economical way to
resolve this case. With the issue of venue now resolved, the
company looks forward to proceeding with this case as quickly as
possible.
Dynegy Inc. (NYSE:DYN) is one of the world's premier energy
merchants. Through its global energy delivery network and
marketing, logistics and risk management capabilities, Dynegy
provides innovative solutions to customers in North America, the
United Kingdom and Continental Europe. The company's Web site is
http://www.dynegy.com
ENRON CORP: GE Power Systems to Complete Wind Acquisition Soon
--------------------------------------------------------------
GE Power Systems is moving forward with its proposed acquisition
of Enron Wind Corp, a global leader in the manufacturing and
installation of wind turbine generators.
The transaction was approved on April 11 by the U.S. Bankruptcy
Court, and is still subject to European Union regulatory
approval, which is expected within the next several weeks.
"Receiving this approval represents an important next step in
helping GE Power Systems move into one of the fastest growing
sectors of the energy industry," said John Rice, president and
chief executive officer of GE Power Systems. The wind energy
sector is expected to grow about 20 percent a year, with
principal markets in Europe, the U.S. and Latin America.
"Adding the resources of Enron Wind will further expand and
diversify our portfolio of environmentally friendly power
generation options," Rice added. "It will also support our
continuing commitment to provide customers with a wide range of
clean energy solutions for the 21st century."
Enron Wind, a wholly owned subsidiary of Enron Corp. of Houston,
Texas, has 1,600 employees worldwide, and is headquartered in
Tehachapi, California with manufacturing operations there and in
Germany and Spain. The company's fully integrated wind power
capabilities include power plant design, engineering and site
selection, and operations and maintenance services.
GE Power Systems -- http://www.gepower.com-- is one of the
world's leading suppliers of power generation technology, energy
services and management systems with 2001 revenues exceeding $20
billion. The business has the largest installed base of power
generation equipment in the global energy industry. GE Power
Systems provides equipment, services and management solutions
across the power generation, oil and gas, distributed power and
energy rental industries.
DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRON2) are quoted at a price of 12.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for
real-time bond pricing.
EXIDE TECHNOLOGIES: Files for Chapter 11 Protection in Delaware
---------------------------------------------------------------
Exide Technologies, Inc. (OTCBB:EXDT) announced that it and
certain of its U.S. subsidiaries filed voluntary petitions for
relief under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court for the District of Delaware.
The Company said that it elected to file for reorganization
because it offered the most efficient way to restructure its
balance sheet and access new working capital while continuing to
operate in the ordinary course of business.
The Company's operations outside of the U.S. are not included in
the filing and will not be adversely affected.
"Over the past several months, we have made a number of
difficult yet necessary operational changes that have exhibited
positive results. We are now taking the next step to resolve our
financial challenges and focus on addressing our balance sheet
issues," said Craig Muhlhauser, president and chief executive
officer.
Exide said that its heavy debt burden, caused largely by a debt-
financed global acquisition strategy and the costs of
integrating these acquisitions, combined with the current
economic conditions has made it necessary for the Company to
file for reorganization to address its financial leverage and
debt burden.
The Company said that it has arranged for $415 million in new
financing, including $250 million in debtor-in-possession
financing provided by Citicorp USA, Inc., a subsidiary of
Citibank N.A., and other financial institutions, and $165
million in financing provided by Citibank N.A. and other
financial institutions for the entities outside of the U.S. that
are not filing. The new financing, subject to Court approval,
provides assurance that Exide will be able to continue to run
its operations in the ordinary course and continue to serve its
customers in a seamless manner. Suppliers who provide goods and
services post-petition will be paid in the normal course.
Muhlhauser continued, "Our operations continue to be solid. With
our lean manufacturing initiative, Excell, we have strengthened
our ability to operate on a more efficient basis. Our fill rates
are currently the highest they have ever been and we continue to
offer our customers top quality products. Additionally, the
realignment of our business units and our strategic sourcing
initiatives have achieved significant productivity gains and
cost savings that have enabled the Company to remain competitive
in a challenging market. Combined with the financial
restructuring, Exide will be in a better position to invest in
our business and ensure our long-term success."
Exide said it has requested, and expects to receive Court
approval to pay employee salaries, wages and benefits in the
normal course of business, as well as continue to meet customer
demands and supply products as usual.
Exide has established a supplier assistance center to answer
questions from its suppliers. The toll free number for suppliers
only is 866-758-8070.
Exide's legal counsel is Kirkland & Ellis. Jay Alix and
Associates and The Blackstone Group are engaged to provide
restructuring and financial advisory services.
Exide Technologies is an industrial and transportation battery
producer and recycler, with operations in 89 countries.
Industrial applications include network-power batteries for
telecommunications systems, fuel-cell load leveling, electric
utilities, railroads, photovoltaic (solar-power related) and
uninterruptible power supply (UPS) markets; and motive-power
batteries for a broad range of equipment uses, including lift
trucks, mining vehicles and commercial vehicles.
Transportation uses include automotive, heavy-duty truck,
agricultural, marine and other batteries, as well as new
technologies being developed for hybrid vehicles and new 42-volt
automotive applications. The Company supplies both aftermarket
and original-equipment transportation customers.
Further information about Exide Technologies, its financial
results and other information can be found at
http://www.exide.com
According to DebtTraders, Exide Technologies' 10% bonds due 2005
(EXIDE2) are quoted at a price of 10. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EXIDE2for
real-time bond pricing.
EXIDE TECHNOLOGIES: Case Summary & Largest Unsecured Creditors
--------------------------------------------------------------
Lead Debtor: Exide Technologies
210 Carnegie Center
Suite 500
Princeton, New Jersey 08540
Bankruptcy Case No.: 02-11125
Debtor affiliates filing separate chapter 11 petitions:
Entity Case No.
------ --------
RBD Liquidation, L.L.C. 02-11126
Exide Illinois, Inc. 02-11128
Exide Delaware, L.L.C. 02-11127
Type of Business: Exide Technologies and its subsidiaries are
the largest producer of lead acid batteries
in the world, manufacturing automotive
batteries and automotive original equipment
as well as motive power batteries, such as
those for use in forklift trucks and other
electric vehicles, and network power
batteries used for back-up power
applications, such as those used for
telecommunications systems.
Chapter 11 Petition Date: April 14, 2002
Court: District of Delaware (Delaware)
Debtors' Counsel: Laura Davis Jones, Esq.
Pachulski, Stang, Ziehl Young & Jones
919 North Market Street
16th Floor
Wilmington, Delaware 19899-8705
302 652-4100
Fax : 302-652-4400
- and -
Mathhew Kleiman, Esq.
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
312 861-2000
Fax : 312-861-2200
Total Assets: $2,073,238,000
Total Debts: $2,524,448,000
Debtor's 40 Largest Unsecured Creditors:
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank of New York Trustee - 2.9% $367,900,000
5 Penn Plaza, 13th Floor Convertible Senior
New York, New York Subordinated Bonds
10001-1810
Corporate Trust/Trustee
Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
Bank of New York Trustee - 10th $300,000,000
5 Penn Plaza, 13th Floor Senior Notes
New York, New York 10001-1810
Corporate Trust/Trustee
Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
United States of America Guarantee $27,500,400
Chris Origliosso
650 Missouri Avenue
Suite 103
East St. Louis,
Illinois 62201
c/o Mirriam F. Miquelon
Assistant US Attorney
750 Missouri Avenue, 3rd
Floor
East St. Louis, Illinois 62201
Daramic Incorporated Trade $8,679,687
PO Box 751905
Charlotte, North Carolina
28275
270-683-1561
Fax: 270-686-9226
McKinsey & Co., Inc. Trade $4,834,850
PO Box 72477255
Philadelphia, Pennsylvania
19170-7255
312-551-3500
Fax: 314-453-7189
Doe Run Company Trade $4,018,631
PO Box 956159
St. Louis, Missouri
63195-6159
314-453-7100
Fax: 314-453-7189
Mann Shayang Batt Trade $2,194,436
Entp Co Ltd
156-1 Fub An Village
Ah Lieh Hsiang
Kadhsung Hsien
Taiwan R.O.C.
011-88676331161
Fax: 011-88676331746
Yacht Battery Trade $2,041,951
Rm. No. 5F-1 No. 212
Taipei
011-856225782128
Fax: 011-886225778439
Water Gremlin Company Trade $1,648,472
1610 Whitaker Avenue
White Bear Lake, MN 55110
651-429-7761
Fax: 651-429-9611
National Automotive Trade $1,474,372
Parts Association
2999 Circle 75 Parkway
Atlanta, Georgia 30339
770-956-2200
Fax: 770-956-2210
Sovema GT, LLC Trade $1,131,168
118 Panmenas Lane
Chattanooga, Tennessee
37405
423-698-0948
Fax: 423-622-4944
Transervice Logistics Inc. Trade $1,095,040
Attn: Dallas Hullage
5 akota Drive
Lake Success, New York
11042-1188
516-488-3400
Fax: 516-488-3574
Entact Trade $856,919
4040 West Royal Lane,
Suite 136
Irving, Texas 75063
972-580-1323
Fax: 972-550-7464
Eds Corporation Trade $844,282
PO Bo 281935
Atlanta, Georgia 30384-1935
972-605-2515
Fax: 972-605-2515
Accuma Corporation Trade $799,301
133 Fanjoy Road
Statesville, North Carolina
28625
Grafika Commercial Trade $780,467
Printing
710 Johnston Street
Sinking Spring, Pennsylvannia
GE Capital Trade $758,287
PO Box 747016
Pittsburgh, Pennsylvannia
15274
Marsh USA Inc. Trade $748,310
1166 Avenue of the Americas
New York, New York 10036
212-345-2582
Fax: 212-345-4752
Schopf & Weiss Trade $737,115
312 West Randolph Street,
Suite 300
Chicago, Illinois 60606
312-701-9300
Fax: 312-701-9335
Tulip Corp. Trade $710,211
PO Box 51789
Los Angeles, California
90051
414-936-3180
Fax: 414-962-1825
Sparton Technologies Trade $686,678
4901 Rocksway Boulevard SE
Rio Rancho, NM 87124
505-892-5300
Fax: 505-892-5515
KW Plastics/Troy Trade $646,678
Attn: James Long
Troy, AL 36081
334-566-1563
Fax: 334-566-0107
Saft Power Systems Inc. Trade $638,975
125 Nantucket Boulevard
Scarborough, Ontario MIP 2N8
416-757-5151
Fax: 416-752-4514
Hardigg Industries Trade $638,403
2405 Norcross Drive
Columbus, Indiana 47201
413-665-2163
Fax: 413-665-4801
Ogletree Deakins Nash Trade $614,156
Smoak & Stewart
PO Box 101860
Atlanta, Georgia 30392-1860
803-252-1300
Fax: 803-254-6517
Grand Rapids Label Trade $599,235
Company
2351 Oak Industrial Drive
Grand Rapids, MI 49505
616-459-8134
Fax: 616-459-4543
Finova Capital Corp. Trade $592,702
33523 Treasury Center
Chicago, Illinois 60694-3500
800-945-6445
Fax: 201-634-3480
Nova PB Inc. Trade $572,289
1200 Rue Gomiter
Catherine, Quebec
Canada, JQL I8O
450-632-9910
Fax: 450-632-9090
Gopher Resources Trade $572,300
3385 South Highway 140
Hagan, MN 55121-2395
651-454-3310
Fax: 651-654-7926
Seibel Modern Mfg. & Trade $553,109
Weling Corp.
38 Palmer Place
Lancaster, New York 14086
716-683-1536
Fax: 716-683-2552
Commonwealth Relocation Trade $545,400
Services Inc.
Two Down Square
Wayne, Pennsylvania 10087
610-263-3200
Fax: 610-263-2550
Morrison & Forrester LLP Trade $542,894
Client Trust Account
San Franisco, California 94105
415-268-7000
Fax: 415-268-6306
Woodlake Parview Trade $504,609
Investors LLC
Alter Asset Management as
Agent
Lombard, IL 60148
630-620-3600
Fax: 630-620-6306
Hollingsworth & Vose Trade $443,770
Company
Company RT 113
Greenwich, New York 12834
508-668-0295
Fax: 508-668-3557
Federal Mogul Ignition Co. Trade $443,570
21497 Network Place
Chicago, Illinois
60673-1214
800-521-8605
Fax: 248-354-7700
Richardson Molding Trade $442,716
Incorporated
931 Herman Alford Memorial
Highway
Philadelhia, Pennsylvania
39350
601-656-7921
Fax: 601-656-8044
Maysteel Corporation Trade $473,266
800 Harrison Street
Mayville, WT 53050
920-387-5006
Fax: 920-387-3600
Powerlab Inc. Trade $433,913
PO Box 913
Terell, Texas 75160
927-563-1477
Fax: 972-563-8473
Worldwide Dedicated Trade $420,675
Services
Attn: Katie Williamson
Lodgeville, KY 40258
856-224-7208
Fax: 856-423-8951
AFCO Trade $400,778
PO Box 360572
Pittsburgh, Pennsylvania
15250
800-228-6901
Fax: 913-491-6638
FFC HOLDING: Pushing for Lease Decision Time Extension to July 8
----------------------------------------------------------------
FFC Holding, Inc. and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of Delaware to extend the time
period within which they must elect to assume, assume and
assign, or reject unexpired leases of nonresidential real
property, through July 8, 2002.
The Debtors explain to the Court that in light of their efforts
to address significant issues to ensure the viability of their
business, it is still premature to determine whether assumption
or rejection will provide the greatest benefit to the estates.
To de-leverage their balance sheet and increase profitability,
the Debtors are currently pursuing cost reductions in retiree
benefits and pension plan payment obligations, which they
believe, will lead them to a successful reorganization.
The Debtors assert that an extension is appropriate for the
reorganization plan or an alternative going concern sale. If the
requested extension is not granted, they will be compelled
either to assume long-term liabilities for rent, which could
create substantial administrative expense claims.
FFC Holding, Inc. filed for Chapter 11 protection on July 13,
2001. Christopher James Lhulier, Esq. and Laura Davis Jones,
Esq. at Pachulski Stang Ziehl Young represent the Debtors in
their restructuring efforts.
FEDERAL-MOGUL: Future Rep. Wins Nod to Hire Resolutions LLC
-----------------------------------------------------------
Eric D. Green, the Legal Representative for the Future Asbestos-
Related Claimants in the chapter 11 cases of Federal-Mogul
Corporation and debtor-affiliates, obtained an order from the
Court authorizing his employment and retention of Resolutions
LLC as consultants, nunc pro tunc to February 4, 2002.
Resolutions LLC is an arbitration and dispute resolution firm
with a wide variety of court appointments and out-of-court
engagement. The Futures Representative intends to utilize
Resolutions LLC for general administrative support services as
well as for assistance with analyzing and summarizing the
voluminous data that will be produced by the Debtors during the
course of these cases.
The compensation will be payable to Resolutions LLC on an hourly
basis plus reimbursement of actual, necessary and reasonable
costs incurred by the firm. The professionals who will assist
the Futures Representative in these cases together with their
respective hourly rates are:
Douglas C. Allen (Analyst) $250/hour
Cathy Kern (executive Assistant) $ 60/hour
(Federal-Mogul Bankruptcy News, Issue No. 14; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
FOSTER WHEELER: Banks Extend Waivers Under Credit Facilities
------------------------------------------------------------
Foster Wheeler Ltd. (NYSE:FWC) reported that it filed its Annual
Report on Form 10-K with the Securities and Exchange Commission
and recorded an additional $46 million of charges against
earnings in the fourth quarter of 2001. Also, the company
announced it has obtained extensions of its waivers under its
current financing facilities, and is continuing to work with its
bank group on a revision of its credit agreement.
Fourth Quarter Charge Revised
In a news release dated January 29, 2002, the company reported
2001 year-end results that recognized after-tax charges of
$101.5 million in the fourth quarter. In the 10-K filed Friday,
that amount has been adjusted to include an additional $29.9
million after tax. This consists of $23.4 million in additional
project cost overruns and $6.5 million in overdue accounts
receivable. The revised after-tax charges for 2001 total $131.4
million.
Including these revised charges, and a $16.1 million increase in
the previously announced $155.8 million reserve for deferred tax
assets, the net loss for the fourth quarter 2001 was $319.3
million on revenues of $1,034.9 million. In the year-ago fourth
quarter, net earnings were $12.3 million on revenues of $1,088.8
million.
For the full year ended December 28, 2001, the company had a net
loss of $309.1 million, compared to net earnings of $39.5
million for the year ended December 29, 2000.
The revised charges do not affect the company's cash position,
which was $224 million in cash and cash equivalents at the end
of the fourth quarter 2001. At the close of the first quarter on
March 29, 2002, its cash position improved to $423 million.
The recently discovered cost overruns are isolated within the
same group of seven projects cited in the company's January 29
news release. Work on six of the seven projects has been
substantially completed.
"I am extremely disappointed in the performance of this business
unit," said Raymond J. Milchovich, the company's chairman,
president and CEO. "I can assure you that actions have and will
continue to be taken to address the performance of this business
unit. The timing of these developments has also delayed our
progress on a new credit facility which, given the positive
momentum that we had built with our lenders, is unfortunate.
"This situation, although unfortunate, must be put in
perspective. Our current cash position is very strong, most of
our businesses worldwide are reporting solid performance, and
our previously announced company-wide performance improvement
intervention is already delivering significant and systemic
savings. Looking at the whole picture, I remain confident in our
ability to resolve these near-term issues and continue to
deliver outstanding service to our customers worldwide," he
said.
Bank Waivers Extended
Foster Wheeler has obtained an extension of its waiver under its
revolving credit facility through April 30, 2002, subject to the
satisfaction of certain ongoing conditions, including the
forbearance of remedies by the lenders under its lease financing
facility and an extension of its receivables sale arrangement.
The company has also received a forbearance of remedies by the
lenders under its lease financing facility through April 30,
2002, and has received an extension of its receivables sale
arrangement through April 29, 2002. Management is in discussions
with its lenders and various other financial institutions
regarding a new long-term credit facility and a replacement for
its lease financing and receivables sale arrangement.
As a result of Foster Wheeler's continuing discussions with its
bank group concerning an extension of its credit facilities, the
company's auditors rendered an opinion with an emphasis of
matter paragraph regarding the company's ability to continue as
a going concern.
Quarterly Conference Call
Management is currently revising its performance projections for
2002 and will revise its previous guidance downwards during its
next quarterly conference call on Wednesday, May 1, 2002 at
11:00 a.m. Eastern Daylight Savings Time. The company expects to
release the results for the first quarter on the previous day,
after the market closes.
The call will be accessible to the public by telephone or web
cast. To listen to the call by telephone in the United States,
dial 877-692-2588 approximately ten minutes before the call.
International access is available by dialing 973-321-1040. The
conference call will also be available over the Internet at
www.fwc.com or through StreetEvents at www.streetevents.com.
A replay of the call will be available on the company's Web site
as well as by telephone. To listen to the replay by telephone,
dial 877-519-4471 or 973-341-3080 (Pin #3196377 required)
starting one hour after the conclusion of the call through 8:00
p.m. Eastern on Wednesday, May 8, 2002. The replay can also be
accessed on the company's Web site for two weeks following the
call.
According to DebtTraders, Foster Wheeler Corporation's 6.750%
bonds due 2005 (FWC) are quoted at a price of 58. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=FWCfor real-
time bond pricing.
GALEY & LORD: Creditors' Meeting Scheduled for May 23, 2002
-----------------------------------------------------------
A meeting of Galey & Lord, Inc. and its debtor-affiliates'
creditors will convene on May 23, 2002 at 3:00 p.m., at the U.S.
District Court, 844 King St., Room 2112, Wilmington, Delaware.
This is the first meeting of creditors required under 11 U.S.C.
Sec. 341(a) in all bankruptcy cases.
All creditors are invited, but not required, to attend. This
Meeting of Creditors offers the one opportunity in a bankruptcy
proceeding for creditors to question a responsible office of the
Debtor under oath about the company's financial affairs and
operations that would be of interest to the general body of
creditors.
G&L, a leading global manufacturer of textiles for sportswear,
including cotton casuals, denim, and corduroy, and is a major
international manufacturer of workwear fabrics, filed for
chapter 11 protection on February 19, 2002 together with its
affiliates. When the Company filed for protection from its
creditors, it listed $694,362,000 in total assets and
$715,093,000 in total debts.
DebtTraders says that Galey & Lord Inc.'s 9.125% bonds due 2008
(GNL1) are quoted at a price of 13.5. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=GNL1for
real-time bond pricing.
HAYES LEMMERZ: Court Okays Professional Compensation Procedures
---------------------------------------------------------------
Hayes Lemmerz International, Inc., and its debtor-affiliates
obtained authority from the Court to establish uniform
compensation and reimbursement procedures for court-approved
professionals on a monthly basis, on terms comparable to those
procedures recently established in other large Chapter 11 cases
in this district.
Grenville R. Day, Esq., at Skadden Arps Slate Meagher & Flom LLP
in Wilmington, Delaware, explains that the Debtors sought the
establishment of procedures for compensating and reimbursing
court-approved Professionals on a monthly basis in order to
permit the Court and other parties to more effectively monitor
the professional fees incurred in these Chapter 11 cases. Under
Section 331 of the Bankruptcy Code, the Court may permit the
Professionals to submit applications for interim compensation
and reimbursement more frequently than the prescribed period of
every 120 days. Such a payment schedule will permit the Court
and other parties to more effectively monitor the fees and
expenses incurred by the Professionals, will enable the Debtors
to maintain a more level cash flow availability, and will
diminish undue financial constraints on the Professionals.
Mr. Day notes that Section 503(b)(3)(F) of the Bankruptcy Code
grants administrative expense status to the actual, necessary
expenses incurred by members of statutory committees in the
performance of their official duties. To discharge this
administrative expense obligation, the Debtors desire to
establish a uniform mechanism by which Committee members may
obtain regular, monthly reimbursement payments for appropriate
expenses.
Specifically, the Debtors propose that the monthly payment of
compensation of fees and reimbursement of expenses of the
Professionals be structured as follows:
A. No earlier than the 25th day of each calendar month, each
Professional seeking interim compensation will file an
application with the Court for interim approval and allowance
of compensation for services rendered and reimbursement of
expenses incurred during the immediately preceding month. The
first Monthly Fee Application shall be filed no earlier than
January 25, 2002 and shall cover all fees and expenses
incurred during the period from the Petition Date through
December 31, 2001.
B. Each Monthly Fee Application will comply with the Bankruptcy
Code, the Federal Rules of Bankruptcy Procedure, applicable
Third Circuit law and the Local Rules of this Court and is
served on the following parties:
a. Hayes Lemmerz International, Inc., 15300 Centennial Drive,
Northville, MI 48167 ,(Attn: Patrick B. Carey);
b. counsel for the Debtors, Skadden, Arps, Slate, Meagher &
Flom (Illinois), 333 West Wacker Drive, Chicago, IL 60606
(Attn: J. Eric Ivester, Esq.) and Skadden, Arps, Slate,
Meagher & Flom LLP, One Rodney Square, P.O. Box 636,
Wilmington, DE 19899 (Attn: Mark S. Chehi, Esq.);
c. the United States Trustee, 844 King Street, Wilmington, DE
19801,
d. counsel to the Agent for the Debtors' pre-petition Lenders
and to the Agent for the Debtors' proposed post-petition
debtor in possession Lenders, Clifford Chance Rogers &
Wells LLP, 200 Park Avenue, New York, New York 10166-0153
(Attn: Margot B. Schonholtz) and Potter Anderson & Corroon
LLP, Hercules Plaza, 1313 N. Market Street, P.O. Box 951,
Wilmington, Delaware 19899-0951 (Attn: Laurie Selber
Silverstein, Esq.); and
e. counsel to the Committee(s).
C. Each Notice Party has 20 days after service of a Monthly
Fee Application to object to such application. Upon the
expiration of the Objection Deadline, each Professional may
file a certificate of no objection or a certificate of
partial objection with the Court, whichever is applicable,
after which the Debtors would be authorized to pay each
Professional an amount equal to the lesser of:
a. 80% of the fees and 100% of the expenses requested in the
Monthly Fee Application or
b. 80% of the fees and 100% of the expenses not subject to an
objection.
D. If any Notice Party objects to a Professional's Monthly Fee
Application, it must file a written objection with the Court
and serve it on the Professional and each of the Notice
Parties so that it is received on or before the Objection
Deadline. Thereafter, the objecting party and the
Professional may attempt to resolve the objection on a
consensual basis. If the parties are unable to reach a
resolution of the objection within 20 days after service of
the objection, then the Professional may either:
a. file a response to the objection with the Court, together
with a request for payment of the difference, if any,
between the Maximum Payment and the Actual Interim Payment
made to the affected Professional; or
b. forego payment of the Incremental Amount until the next
interim or final fee application hearing, at which time
the Court would consider and dispose of the objection, if
requested by the parties.
E. Beginning with the period ending on February 28, 2002, and at
3-month intervals or such other intervals convenient to the
Court, each Professional will file with the Court and serve
upon the Notice Parties an interim application for allowance
of compensation and reimbursement of expenses of the total
amounts sought in the Monthly Fee Applications filed during
such period. The Interim Fee Application would include a
summary of the Monthly Fee Applications that are the subject
of the request and any other information requested by the
Court or required by the Local Rules. An Interim Fee
Application would be filed and served within 45 days of the
conclusion of the Interim Period. The first Interim Fee
Application would cover the time between the commencement of
the case through and including February 28, 2002. Any
Professional who fails to file an Interim Fee Application
when due is ineligible to receive further interim payments of
fees or expenses under the compensation procedures until such
time as the Interim Fee Application is submitted.
F. The Debtors will request that the Court schedule a hearing on
the Interim Fee Applications at least once every six months
or at such other intervals as the Court deems appropriate.
G. The pendency of an objection to payment of compensation or
reimbursement of expenses would not disqualify a Professional
from future payment of compensation or reimbursement of
expenses, unless the Court orders otherwise.
H. Neither the payment of or the failure to pay, in whole or in
part, monthly interim compensation and reimbursement of
expenses, nor the filing of or failure to file an objection,
would bind any party in interest or the Court with respect to
the allowance of interim or final applications for
compensation and reimbursement of expenses of Professionals.
I. All fees and expenses paid to Professionals are subject
to disgorgement until final allowance by the Court.
Mr. Day informs the Court that notice of the interim and final
fee applications will be served on the Notice Parties and all
parties that filed a notice of appearance with the clerk of this
Court and requested such notice. The Notice Parties are entitled
to receive both the Monthly and Interim Fee Applications and the
notice of hearing thereon, and all other parties entitled to
notice are entitled to receive only the Hearing Notice.
Mr. Day adds that each member of the Official Committee of
Unsecured Creditors is permitted to submit statements of
expenses and supporting vouchers to counsel to the Committee,
who collects and submits the Committee members' requests for
reimbursement to the Court pursuant to the procedure set forth
in the order granting this Motion. The Debtors will include all
payments to Professionals on their monthly operating reports,
detailed so as to state the amount paid to the Professionals.
(Hayes Lemmerz Bankruptcy News, Issue No. 9; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
IT GROUP: Court Allows Payments of Critical Trade Vendor Claims
---------------------------------------------------------------
To the extent not already paid, and with the consent of the
official committee of unsecured creditors, Judge Walrath
authorizes The IT Group, Inc. and its debtor-affiliates to pay,
in their discretion, prepetition Critical Trade Creditors
claims, subject to a $41,000,000 aggregate cap and in accordance
with a Budget supplied to the DIP Lenders. (IT Group Bankruptcy
News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-
0900)
JACOBSON STORES: Fourth Quarter Sales Plunge 26% to $154 Million
----------------------------------------------------------------
Jacobson Stores Inc. announced results for the fourth quarter
and the fiscal year ended February 2, 2002.
Sales for the thirteen-week fourth quarter were $114,227,000,
down 26.1 percent from $154,471,000 for the fourteen-week period
a year ago. Comparable store sales on a thirteen-week to
thirteen-week basis for the quarter were down 20.1 percent. The
company posted a fourth quarter net loss of $30,308,000, or
$5.23 per share, as compared to net income of $1,229,000, or
$0.21 per share, for the corresponding period a year ago.
In the fourth quarter of 2001, Jacobson's recorded $18,500,000
in non-recurring reorganization costs, including the expected
cost of future lease obligations and rejection claims,
impairment of the value of property and equipment, expenses and
losses associated with the disposal of merchandise and other
expenses directly related to the stores it closed. These costs
also included professional fees and the write-off of deferred
costs associated with pre-petition debt.
Sales for the 52 week fiscal year ended February 2, 2002,
decreased 12.7 percent compared to 53 weeks last year, from
$460,119,000 to $401,805,000. Comparable store sales on a 52-
week to 52-week basis for the year declined 10.3 percent.
Jacobson's fiscal 2001 net loss was $57,257,000 for the 52 weeks
as compared to a loss of $2,787,000 for the 53 weeks in fiscal
2000.
In fiscal year 2001, in addition to the $18,500,000 in non-
recurring reorganization costs recorded in the fourth quarter,
the company recorded $5,225,000 in non-recurring charges
relating to the closure of its Saginaw, Michigan, store; its
October 2001 organizational restructuring; and the move of its
Longwood, Florida, store operations to Altamonte Springs in
September 2001.
Commenting on the announcement, Jacobson's President and Chief
Executive Officer Carol Williams said, "We are extremely
disappointed with our performance for fiscal year 2001."
"The recessionary economy worsened after the September 11
terrorist attacks. Our Florida stores, which depend heavily on
tourist spending in the fourth quarter, suffered because of the
significant reduction in travel. Jacobson's midwest stores'
customer traffic was negatively affected during the holiday
season by an unusually mild winter, which reduced sales of
regular- priced cold-weather apparel, footwear and accessories.
"Recognizing the challenges of an uncertain economic climate,
our management took action, closing our under-performing
Saginaw, Michigan, store in August; eliminating 225 positions
company-wide in October; and managing our inventories at lower
levels consistent with our then-current business," Williams
said.
Despite these initiatives, on January 15, 2002, Jacobson's
voluntarily filed for bankruptcy under Chapter 11 with the
United States Bankruptcy Court for the Eastern District of
Michigan, Southern Division, in Detroit.
As part of its financial reorganization, Jacobson's closed five
under-performing stores and eliminated 520 associate positions.
As previously reported, the company has obtained final approval
from the bankruptcy court for a one-year secured debtor-in-
possession revolving credit facility of up to $100 million,
which is being administered by Boston-based Fleet Retail
Finance, Inc.
Carol Williams added: "This new credit facility has enabled us
to replenish our stores with fresh inventories and re-establish
relationships with many of our key vendors."
Jacobson's also announced that it reduced its non-selling
workforce on April 10 by 55 positions. The majority of these
were salaried store-support associates at the company's Jackson,
Michigan, headquarters.
"Although we certainly regret losing valued associates, the
reduction enables our staffing to reflect the current needs of
our 18-store operations," Williams explained.
Jacobson's also announced that its annual shareholder meeting,
traditionally held the fourth Thursday in May, has been
postponed because of its reorganization.
Jacobson Stores Inc. operates 18 specialty stores in Michigan,
Indiana, Kentucky, Kansas and Florida. Its Web site is located
at http://www.jacobsons.com
KAISER ALUMINUM: Asbestos Claimants' Panel Taps Legal Analysis
--------------------------------------------------------------
The Official Committee of Asbestos Claimants, in Kaiser Aluminum
Corporation's chapter 11 cases, asks for Court approval to
retain Legal Analysis Systems, Inc., nunc pro tunc as of
February 25, 2002, as asbestos-related bodily injury consultant
to the Committee.
Official Committee of Asbestos Claimants member, Thomas Craig
relates that Legal Analysis provides expert services regarding
the identification and treatment of asbestos bodily injury
claimants. The services that Legal Analysis will perform for the
Committee include:
A. Estimation of the number and value of present and future
asbestos personal injury claims;
B. Development of claims procedures to be used in the
development of financial models of payments and assets of a
claims resolution trust;
C. Analyzing and responding to issues relating to the setting of
a bar date regarding the filing of personal injury claims;
and
D. Analyzing and responding to issues relating to providing
notice to personal injury claimants and assisting in the
development of such notice procedures.
Mr. Craig tells the Court that the selection of Legal Analysis
is based upon its extensive experience and knowledge with
respect to analyzing and solving complex problems associated
with asbestos-related bodily injury matters.
The experience of Mark A. Peterson, Principal of Legal Analysis
Systems, Inc., includes extensive analytical support in
potential asbestos-related bodily injury claims. He has been
involved in the development of alternative methods of providing
compensation for asbestos-related diseases, estimation of the
costs of such compensation and consulting with asbestos trusts
on claims, procedures and estimations. Mr. Craig believes that
the services of Legal Analysis are both necessary and
appropriate and will assist the Committee in the negotiation,
formulation, development, and implementation of a plan or plans
of reorganization.
Mr. Petersen has served as expert or consultant in similar cases
for these firms: the Babcock & Wilcox Company, Owens Coming
Corporation, Pittsburgh Coming Corporation, Armstrong World
Industries, Inc., Burns & Roe Enterprises, Inc., G-1 Holdings,
Inc., W.R. Grace & Company, United States Gypsum Corporation,
Federal-Mogul Global, Inc., North American Refractories Company,
Dow Coming, Ray tech Corporation, Fuller-Austin Insulation
Company, Inc., H.K. Porter Company, Inc. and six additional
Chapter 11 restructurings.
In addition, Mr. Petersen has provided consultant services to
the Manville Personal Injury, Eagle-Picher, Celotex and H.K.
Porter Asbestos Trusts and other claims resolution settlement
trusts.
Subject to the Court's approval, the firm is compensated on an
hourly basis to be paid by the Debtors. The professionals
expected to render services for the Committee and their current
hourly rates are:
Professionals Position Rate
----------------- ---------------------- ------
Mark A. Peterson $500
Daniel Relles Statistician $330
Patricia Ebener Data Collection Expert $240
Mary Gail Brauner Statistician $185
Gregory Ridgeway Statistician $150
(Kaiser Bankruptcy News, Issue No. 5; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
KAISER ALUMINUM: Fourth Quarter Net Loss Balloons to $583 Mill.
---------------------------------------------------------------
Kaiser Aluminum Corporation (OTCBB:KLUCQ) reported a net loss of
$583.3 million for the fourth quarter of 2001, compared to net
income of $10.9 million for the year-ago quarter.
Excluding the impact of special items from both periods, Kaiser
reported a net loss of $35.5 million for the fourth quarter of
2001, compared to a net loss of $14.5 million for the year-ago
quarter. Such results are consistent with the guidance provided
by the company on Dec. 20, 2001.
As detailed in tables accompanying this press release, results
for the fourth quarters and full years of 2001 and 2000 included
a number of special items. Notable is a non-recurring year-end
2001 non-cash charge of approximately $505.4 million, or $6.27
per share, associated with providing an increased valuation
allowance in respect of the company's deferred tax assets.
Although a DTA charge is common in Chapter 11 cases, it has no
impact on Kaiser's liquidity, operations or loan compliance and
is not intended, in any way, to be indicative of the company's
long-term prospects or ability to successfully reorganize under
Chapter 11. Also included in fourth quarter and full year 2001
results is a non-cash impairment charge of $17.7 million pre-tax
related to the company's decision to sell or idle certain
equipment at the Trentwood, Washington, rolling mill in
connection with the plant's exit from two product lines: lid and
tab stock for the beverage can market and brazing sheet.
For the full year 2001, Kaiser's net loss was $459.4 million
compared to net income of $16.8 million for 2000. Excluding the
impact of all such special items from both full-year periods,
the company reported a net loss of $88.8 million in 2001,
compared to net income of $3.0 million for 2000.
Net sales in the fourth quarter and full year of 2001 were
$375.3 million and $1,732.7 million, compared to $496.1 million
and $2,169.8 million for the same periods of 2000.
Kaiser President and Chief Executive Officer Jack A. Hockema
said, "Excluding the DTA and impairment charges, one can see the
fourth-quarter impact of recessionary levels of demand for
fabricated products; depressed pricing for alumina and primary
aluminum; and lower shipments of primary aluminum due to the
curtailment of the company's Pacific Northwest smelters. In
addition, although the Gramercy, La., alumina refinery steadily
moved toward full operating capacity, it had not yet reached its
efficiency targets in the fourth quarter and so continued to
incur abnormal startup costs.
"The fourth quarter was tough, and we continue to be challenged
in early 2002 by lackluster metal prices and by the power-
related curtailment in March of a potline at the 90%-owned Valco
smelter," said Hockema. "However, we are encouraged by our
strong cash position and by a modest strengthening in our order
book for fabricated products. In addition, the product line
exits at Trentwood enable that mill to focus even more sharply
on its core business of producing heat-treat sheet and plate for
the aerospace and general engineering markets. The company
remains committed to meeting the needs of our customers,
implementing the company's performance improvement initiatives,
moving Gramercy to full potential and taking additional steps to
reduce operating and non-operating costs.
"Kaiser's core businesses are sound, and our day-to-day
operations have been largely unaffected by the company's filing
for Chapter 11 protection on Feb. 12, 2002," said Hockema. "The
decision to file was a difficult one, but it was the only option
that offered the company the time and tools required to
reorganize its financial structure and implement a strategic
plan to return to sustained profitability.
"We are pleased with the support we have received from
customers, suppliers and employees," said Hockema. "And as we
address the company's financial structure through the Chapter 11
process, we expect to maintain the same high standards of
product quality, delivery and service for which we are known."
As of March 31, 2002, Kaiser had approximately $130 million of
invested cash - with no borrowings and only $54 million of
letters of credit outstanding under its $300 million DIP
facility.
Kaiser Aluminum is a leading producer of alumina, primary
aluminum and fabricated aluminum products.
At December 31, 2001, Kaiser Aluminum's total shareholders'
equity deficit amounted to $441 million.
According to DebtTraders, Kaiser Aluminum & Chemicals' 12.750%
bonds due 2003 (KAISER2) are quoted at a price of 23. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for
real-time bond pricing.
KMART CORP: Cott Beverages Pushing for Prompt Decision on Pacts
---------------------------------------------------------------
Cott Beverages Inc. and Cott Vending Inc. ask the Court for an
order:
(i) compelling Kmart Corporation to assume or reject unexpired
executory contracts or, in the alternative, granting Cott
relief from the automatic stay to terminate agreements and
obtain possession of property,
(ii) granting Cott relief from the automatic stay to cease
provision of recycling, maintenance and other services,
(iii) granting Cott relief from the automatic stay to setoff and
recoup debt, and
(iv) granting Cott an allowed administrative expense and
directing payment of expense.
According to David M. Neff, Esq., at Piper, Marbury, Rudnick &
Wolfe, in Chicago, Illinois, Cott -- together with its
affiliated companies -- is the world's largest supplier of
retailer-brand soft drinks. Cott produces, packages and
distributes beverages to regional and national grocery, mass-
merchandise and wholesale chains in the United States, Canada,
the United Kingdom and Europe.
Mr. Neff tells the Court that Cott and Kmart are parties to a
supply agreement dated July 6, 1995, wherein:
(a) Kmart was to purchase all Kmart corporate brands and
private label soft drinks and related products, including
"New Age" products, from Cott;
(b) Kmart was to purchase a minimum number of cases of soft
drink product from Cott as provided in the Supply
Agreement;
(c) Cott was to be Kmart's exclusive supplier of Kmart
corporate brand and private label soft drinks;
(d) the term of the agreement would automatically be extended
until such time as Kmart purchased the minimum quantity of
soft drinks set forth in the Supply Agreement, and
(e) Kmart was to pay Cott certain sums if the agreement was
terminated prior to Kmart's purchase of the minimum
quantity of soft drinks set forth in the Supply Agreement,
based, in part, on the number of cases of soft drinks
delivered by Cott.
At the same time, Mr. Neff says, Cott and Kmart are also parties
to a vendor agreement, pursuant to which Cott was granted a
right and license to make available to Kmart soft drink vending
machines to be placed in various Kmart locations. Mr. Neff adds
that Kmart agreed and is required to stock such Vending Machines
with only Cott products. Cott has more than 2,000 of its
Vending Machines in Kmart locations at its cost and expense.
Mr. Neff notes that the Vendor Agreement is co-terminus with the
term of the Supply Agreement. Upon termination of these
agreements, Mr. Neff explains that Kmart is obligated to pay
Cott a termination payment.
Eight months ago, Cott and Kmart entered into another agreement,
this time, a supply and promotional contract wherein:
(1) Cott paid Kmart a fixed sum -- Kmart Transition Payment --
and agreed to pay Kmart an additional promotional fee
based on the number of cases of certain beverage product
purchased by Kmart;
(2) Kmart agreed to accept delivery of a minimum number of
cases of such beverage product, now labeled as "American
Fare" by September 30, 2001; and
(3) Kmart agreed, to the extent it failed to take delivery of
such minimum number of cases of such beverage product by
September 30, 2001 to reimburse and pay back the Kmart
Transition Payment on a pro rata basis per case.
Prior to the Petition Date, Mr. Neff informs Judge Sonderby that
Kmart breached its obligations under the Supply Agreement by:
(a) engaging one or more suppliers other than Cott to supply
its soft drinks and related products;
(b) purchasing Kmart corporate label and private brand soft
drinks from Outside Suppliers;
(c) failing to use its best efforts to purchase the required
minimum number of cases of soft drinks;
(d) failing to pay Cott amounts due for soft drinks delivered
by Cott; and
(e) otherwise breaching terms of the Supply agreement,
including exclusivity provisions and implied covenants of
good faith and fair dealing.
Furthermore, Mr. Neff reports that the Debtors breached the
Vendor Agreement by stocking the Cott Vending Machines with non-
Cott products manufactured by Outside Suppliers. Mr. Neff
relates that the Debtors also breached the Supplemental Supply
Agreement by failing to purchase the minimum quantity of the
beverages as required by such agreement and failing to pay Cott
the pro rata portion of the Kmart Transition Payment owed to
Cott due to such failure. Since neither Kmart nor Cott
terminated the Agreements prior to the Petition Date, Mr. Neff
says, such Agreements remain in effect.
As of the Petition Date, Mr. Neff claims that Cott was owed in
excess of $3,276,778 pursuant to the Agreements. Mr. Neff
complains that Kmart has not cured its pre-petition breaches and
continues in breach of its post-petition obligations.
A month ago, Mr. Neff says, Kmart notified Cott that it:
-- did not intend and was not going to purchase any product from
Cott under the Agreements; and
-- intended to obtain its soft drink products from Outside
Suppliers; and
-- would consider purchasing only "New Age" product from Cott,
but only on terms and conditions other than those provided
under the Agreements.
Mr. Neff points out that until such time Kmart elects to assume
or reject the Agreements, Cott is prevented from committing a
portion of its production capability and related equipment,
personnel and facilities to new or alternative opportunities.
Clearly, Mr. Neff asserts, Cott is prejudiced by the Debtors'
failure to make a decision on the Agreements. On the other
hand, Mr. Neff notes, the Debtors will not be prejudiced if
compelled to make such a decision because they are currently
purchasing their soft drinks from Outside Suppliers and have no
intention of purchasing Cott products.
If the Debtors won't make the decision, Mr. Neff says, Cott will
make it for them. Cott alternatively seeks relief from the
automatic stay in order to terminate the agreements because the
Debtors' post-petition breaches and ongoing possession and use
of Cott's Vending Machines without consideration or adequate
protection harm Cott.
Moreover, Mr. Neff explains that Cott also wants to effect a
setoff since it owes Kmart certain bill back dollars accrued
under the Supplemental Supply Agreement and Kmart owes it
amounts pursuant to the Agreements.
According to Mr. Neff, Cott continues to provide Kmart
recycling, maintenance and other services. "Recycling services
are provided by third parties with costs invoiced to Cott for
payment," Mr. Neff explains. Mr. Neff relates that Cott has
received $6,490 in invoices related to post-petition recycling
of Kmart products and containers. Mr. Neff argues that Cott
should not be obligated to provide post-petition services
without compensation, including incurring costs for post-
petition recycling of Kmart products. Thus, Mr. Neff asserts
that Cott is entitled to relief from the automatic stay to cease
recycling containers, maintaining the Vending Machines and
providing other services to Kmart.
Since Cott provided Kmart post-petition services, Mr. Neff
contends that Cott is also entitled to receive as an allowed
administrative expense in the amount of $6,490, plus the face
amount of invoices for post-petition maintenance of the Vending
Machines, and invoices received from third parties for recycling
services. (Kmart Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
KNOWLES ELECTRONICS: Misses Interest Payment on 13-1/8% Notes
-------------------------------------------------------------
Knowles Electronics Holdings, Inc. said that when its first
quarter financial statements are finalized it expects that it
will not be in compliance with several of the covenants under
its bank credit agreement as of March 31, 2002. The company is
currently in the process of negotiating modifications to and
waivers of the covenants with its lenders under the bank credit
agreement. As a result, the company expects to delay the filing
of its Annual Report on Form 10-K for 2001 until the completion
of these covenant negotiations. The company also did not make
the interest payment on its 13-1/8% Senior Subordinated Notes
Due 2009 scheduled for April 15, 2002 until the waivers have
been received.
Knowles Electronics is the world's leading manufacturer of
transducers and related components used in hearing aids. The
company also manufactures acoustic components used in telephony
and mobile device applications as well as automotive solenoids
and sensors. In 1999, the European fund management company
Doughty Hanson & Co Ltd acquired Knowles.
LTV CORP: Court Set May 20 as Bar Date for Administrative Claims
----------------------------------------------------------------
Numerous creditors of LTV Steel object to the Debtors' Motion,
pointing out their reliance on LTV Steel's representations and
the unfairness of payment of some - but not all - administrative
creditors on a current basis.
Midwest Service Center and Area Sheet
Metal Inc Take It Personally
Midwest Service Center, Inc., and Area Sheet Metal, Inc.,
represented by Michael K. Desmond of the Chicago firm of
Figliulo & Silverman PC, tell Judge Bodoh that each of them
filed motions for allowance and payment of their administrative
claims, and LTV Steel filed objections to both of them. On
February 5, 2002, the Debtors, Midwest and ASM reached an
agreement for the entry of an order allowing the claims of
Midwest and ASM to the extent there was no dispute and
continuing the balance of the motions to April 23, 2002.
However, the Debtors have failed, and continue to fail, to
submit the agreed order to Judge Bodoh - contrary to the
agreement and understanding of both Midwest and ASM.
Now the Debtors seek to amend the case management procedures
with respect to requests for allowance of administrative claims
solely in an effort to further delay allowance and payment of
Midwest and ASM.
What the Debtors are attempting to do is have this Court rewrite
the priority distribution scheme of the Bankruptcy Code so as to
give a superpriority administrative status to professionals and
favored creditors under the APP solely for the benefit of the
DIP Lenders, and delay allowance and payment to all other
administrative creditors until such time as the estate resources
are completely depleted and the estate is administratively
insolvent. At this point administrative creditors are left
without a remedy as the Debtors have apparently waived 506(c)
claims against the DIP Lenders.
After the filing of the bankruptcy case Midwest and ASM
continued to supply the Debtors with parts and labor based on
representations and assurances from the Debtors that goods and
services supplied would be paid for in full in the normal course
of business and on favorable terms. Midwest and ASM include a
letter dated January 8, 2001, signed by D. W. Babcock, General
Manager for Procurement, saying "We intend to pay for these
goods and services in full in the normal course of business and
in accordance with the terms of our existing relationships. . .
." Midwest and ASM relied on these representatives in agreeing
to extend additional credit to the Debtors on a postpetition
basis.
If Judge Bodoh is going to allow any further delay in the
allowance and payment of administrative claims, this delay
should apply to all administrative creditors, including
professionals employed by the estate and those creditors now
receiving favored status under the APP. Any other result is
contrary to the Bankruptcy Code and an abuse of the bankruptcy
process.
Hunter Corporation
James H. J. Sprayregen of the Chicago firm of Kirkland & Ellis,
and Joel J. Sprayregen of the Chicago firm of Shefsky & Froelich
Ltd., representing Hunter Corporation, object, saying the Motion
is masked as a procedural motion, but the substance of the
Motion is to establish a two-tier system for payment of
administrative claims; i.e., a favored class consisting of post-
APP claimants and a substantially disfavored and prejudiced
class of pre-APP administrative expense claimants. The
Bankruptcy Code does not authorize any such two-tier scheme.
The proposed two-tier system for paying administrative expense
claims presents a structure in which the value of the services
and goods provided by pre-APP claimants are being used to pay
post-APP claimants. If this system is implemented, there is no
reason why the Debtor will not try to establish further tiers of
payment. This constitutes classically, and self-evidently, the
fleecing of administrative creditors under the auspices of the
Bankruptcy Court about which this Court itself has expressed
concern during the course of these proceedings.
Citing the several methods and types of assurances of payment
received by Hunter and other creditors, such as JWP/Hyre, Mr.
Sprayregen also suggests that the use of this Court's orders
also constitutes fleecing of creditors.
During a hearing on December 4, 2001, Thomas L. Garrett, Jr.,
LTV's chief financial officer, testified that in both mid-
September and mid-November 2001, he promptly and simultaneously
communicated to his purchasing and procurement personnel the
fact that LTV was experiencing an imminent cash crisis.
Undisputed evidence presented by Hunter in a prior hearing shows
that representations were made during this same period of time
to Hunter by LTV's purchasing managers that LTV had substantial
money with which to pay Hunter. It appears that either LTV's
chief financial officer testified falsely to this Court about
what he told his purchasing and procurement personnel, or the
purchasing managers deliberately and knowingly defrauded Hunter.
The estate appears to be administratively insolvent. If the
estate lacks money with which to pay administrative expense
creditors and can continue to operate only by continuing to
fleece creditors with Ponzi-type schemes, Judge Bodoh should
consider whether the relief now being sought by the Debtor is
fair and equitable. It appears to Hunter to be inequitable to
allow the same LTV management who allowed this estate to fall
into administrative insolvency to continue deciding - without
disclosure as to the basis on which they are proceeding - which
administrative expense claimants should be paid and which shall
suffer the pain of nonpayment.
The title of the Motion suggests that procedural matters are
being presented, but in truth this motion will substantially
affect the substantive rights of numerous administrative expense
claimants, most likely far more claimants than the claimants
whose names appear on the service list. The extent of these
claims is known only to LTV. The impact of the relief sought by
the Debtor will substantially prejudice many pre-APP claimants
and indeed may put them, like Hunter Corporation, out of
business.
JWP/Hyre Electric Co. of Indiana
Represented by Kenneth D. Reed of Abrahamson & Reed of Hammond,
Indiana, JWP/Hyre Electric Company of Indiana objects, telling
Judge Bodoh that the Debtors' counsel's assertion that notice of
the Motion was given to parties that had filed pending motions
to have their claims paid is inaccurate. Neither JWP/Hyre nor
its counsel received service of the Motion, but rather counsel
learned of it from counsel for other clients, who were then kind
enough to fax a copy to JWP/Hyre's counsel.
It is unclear from the verbiage of this Motion whether the
proposed amendment would have any impact upon, or include within
its scope, JWP/Hyre's claim, since the Debtors' Motion refers to
"pending claims". JWP/Hyre's Motion has been filed and oral
arguments conducted, and the matter pends under advisement. If
JWP/Hyre is affected, it objects and points out inaccuracies in
the Motion. First, the suggestion that the DIP Lenders have a
first-priority security interest in all of the collateral fails
to take into account the mechanics' lien interests in that same
collateral owned by JWP/Hyre and perfected so that lien has
priority over the DIP Lenders. Second, the Debtor's Motion
assumes that the issues raised in all these motions are
"substantially similar", but Judge Bodoh mentioned from the
bench that JWP/Hyre's Motion was materially dissimilar from the
other administrative claims types of motion and deserves
separate treatment. For these reasons, JWP/Hyre asks the Motion
be denied.
Other Objections
In addition to these three eloquent objections, other creditors
objected to the Motion on the same or similar grounds. These
are:
Union Electric Steel Corporation and The Davy Roll Company
Ltd. holding administrative claims in the aggregate amount of
$1,258,161 plus interest, represented by Gary Philip Nelson of
Pittsburgh firm of Sherrard German & Kelly PC.
C&K Industrial Services, Inc. and Enviroserve JV,
represented by Robert W. McIntyre of the Cleveland firm of
McIntyre Kahn Kruse & Gillombardo Co. LPA.
General Electric Capital Corporation for $643,888.60 in
postpetition rental charges, represented by Robert M. Hirsh of
the New York firm of Pitney Hardin Kipp & Szuch LLP.
Questar, Inc. and Sargent Electric Company for $114,796.77
from sale of goods, represented by Joel K. Dayton of Black
McCuskey Souers & Arbaugh of Canton Ohio.
United Refractories Inc., represented by Dean E. Nielsen of
the Warren Ohio firm of Harrington Hoppe & Mitchell Ltd.
Erie Industrial Maintenance, Inc., represented by Patrick
M. Flanagan of Rocky River, Ohio.
Central Rent-A-Crane, Inc., represented by James A. Foster
and Brian A. Schroeder of Chicago.
ICX Corporation represented by Robert C. Folland of the
Cleveland firm of Thompson Hine LLP.
The City of Shelby, GeGa Corporation, MidDough Associates,
Inc., Towlift, Inc., and Crow Executive Air, Inc., represented
by Kathryn A. Williams of the Cleveland firm of Weltman Weinberg
& Reis Co. LPA
Continental Electric and Brechbuhler Scales, represented by
Patrick J. Keating of Buckingham Doolittle & Burrouoghs LLP of
Akron Ohio.
Forest City Erectors, Inc., represented by Stephen F.
Gladstone Of Frantz Ward of Cleveland.
Vesuvius USA Corporation, holding a claim of $1,233,999.35
for postpetition services and goods, represented by Richard G.
Zellers and Melody Dugic Gazda with Luckhart Mumaw Zellers &
Robinson of Canfield Ohio.
GATX Capital Corporation, Tenk Machine & Tool Company, and
N. J. Petterson, Inc., represented by Mary K. Whitmer of Brouse
McDowell of Cleveland, Ohio.
Judge Bodoh's Ruling
Despite these objections, Judge Bodoh recognizes the need for
the imposition of order in these many requests for
administrative claims, saying "[t]he sheer volume in which
Motions have been filed" moves him to establish uniform
procedures to address them", and grants the Motion setting a
claims bar date for administrative claims for May 20, 2002,
for all persons or entities who may have or assert unpaid
administrative claims against LTV Steel. As to the issue of
immediate payment, Judge Bodoh says he cannot order immediate
payment at this time as the Debtor states unequivocally that it
currently lacks unencumbered funds to pay the costs of
administration, and thus Judge Bodoh anticipates the potential
for a proration of first-priority expenses.
This Order establishes the date by which any entity or person
must assert certain types of claims:
(1) Any unpaid postpetition administrative expense claim
for goods delivered to or services performed for LTV Steel on or
after the Petition Date and before May 20, 2002;
(2) Any unpaid postpetition administrative expense claim
related to an executory contract or unexpired lease that has
been assumed or rejected by LTV Steel by May 20, 2002; and
(3) Any reclamation claims asserting an administrative
priority status under section 2-702 of the Uniform Commercial
Code and section 546(c) of the Bankruptcy Code.
Any person or entity which fails to assert an administrative
trade claim in a timely manner will be forever barred from that
assertion against LTV Steel's estate and barred from
participating in any distribution from that estate.
Certain entities are not required to file proofs of claim at
this time. These are:
(a) Any entity or person whose claim against LTV Steel
has been paid;
(b) Any entity or person that holds only a prepetition
claim against LTV Steel or any of the other Debtors;
(c) Any entity or person that holds a postpetition
administrative expense claim (including an administrative trade
claim) against any Debtor other than LTV Steel;
(d) Any entity or person that holds a postpetition
administrative expense claim against LTV Steel that is not an
administrative trade claim;
(e) Any entity or person that holds a claim against LTV
Steel arising out of an executory contract or unexpired lease
that has not been assumed or rejected by LTV Steel prior to the
administrative trade claim bar date; or
(f) Any of:
(i) any union, including the United Steelworkers of
America, that was a party to any collective bargaining agreement
with any of the Debtors as of the Petition Date;
(ii) any governmental unit, including the Pension
Benefit Guaranty Corporation, any taxing authority or any
environmental authority;
(iii) any of the Debtors' employees, former
employees or retired employees;
(iv) any Debtor or affiliate of a Debtor that holds
a claim against LTV Steel or any of the other Debtors; and
(v) any professional that has been retained in
these cases under the Bankruptcy Code.
Judge Bodoh orders that administrative claims filed by the bar
date should include such detailed invoices, billing, bills of
lading, receipts, work orders, purchase orders or such other
documentary evidence the claimant has for the basis of its
administrative claim with date(s) upon which the claim was
incurred. He explains that the purpose for this is to minimize
the time needed for discovery, unless there is an objection to
the authenticity of the documents.
A request filed and signed in accordance with his order will
constitute prima facie evidence of the validity and amount of
the claim. Any administrative claims previously filed with this
Court in whatever form shall be refilled with this Court by the
bar date and shall include the documentary evidence described in
the Order.
The Debtor is ordered to file responses or objections to the
administrative claims with this Court on or before the close of
business July 15, 2002. The Debtor may file an omnibus response
or objection.
Where there is no objection to the amount of the claim, the
claim will be allowed without the necessity of a hearing or
further judicial proceeding.
If there is an actual good faith dispute, counsel are expected
to seek resolution of the dispute, short of an evidentiary
hearing. If an actual good faith dispute cannot be resolved,
the Court will promptly set a date for an evidentiary hearing.
(LTV Bankruptcy News, Issue No. 28; Bankruptcy Creditors'
Service, Inc., 609/392-00900)
LODGIAN INC: Seeks Nod to Assume Hawthorne Employment Agreement
---------------------------------------------------------------
Lodgian, Inc. and its debtor-affiliates request authorization to
assume their pre-petition employment agreement with President
and Chief Executive Officer David Hawthorne, pursuant to Section
365 of the Bankruptcy Code.
According to Gregory M. Petrick, Esq., at Cadwalader Wickersham
& Taft in New York, the successful reorganization of the
Debtors' business operations is dependent on effective and
knowledgeable leadership. Mr. Hawthorne possesses the skills
and familiarity with the Debtors' businesses that are essential
to guiding the Debtors through their reorganization. As Chief
Executive Officerand Executive Vice President of a number of
major companies, such as, Tower Records, Premier Cruise Lines,
Alliance Entertainment Corporation and Kendavis Holding Company,
Mr. Hawthorne played an active role in leading their respective
reorganization efforts. Mr. Petrick notes that in his role as
Chairman and Chief Executive Officer to Servico Hotels and
Resorts, Inc., the predecessor of Lodgian, Inc., Mr. Hawthorne
developed and implemented business strategies that resulted in
an increase of stock price from $3.00 to $15.00 a share in less
than three years. Mr. Hawthorne is needed to effectuate the
Debtors' restructuring in an orderly, prompt and efficient
manner.
Mr. Petrick claims that the Debtors' ability to stabilize and
preserve their business operations and assets will be
substantially hindered if the Debtors are unable to retain Mr.
Hawthorne's services. If Mr. Hawthorne were to leave the
Debtors' employ at this critical time, it is not likely that the
Debtors could attract a replacement of comparable quality,
experience, knowledge and character. Moreover, Mr. Petrick
argues that any other candidate for Chief Executive Officer
would not have the in-depth and historical knowledge of the
Debtors' businesses. The potential time and cost of recruiting
fees and sign-on bonuses for a replacement, as well as the
learning curve necessarily involved in hiring a replacement, far
outweighs the potential cost associated with the assumption of
the Employment Agreement.
The Debtors submit that the assumption of the Employment
Agreement will aid the Debtors' reorganization by retaining the
services of Mr. Hawthorne through the conclusion of these
Chapter 11 cases. Accordingly, the Debtors believe that the
assumption of the Employment Agreement is justified by a sound
business purpose and is in the best interests of the Debtors and
their creditors.
Effective November 1, 2001, acting pursuant to authorization
from the Debtors' Board of Directors, Mr. Petrick relates that
Lodgian entered into the Employment Agreement with Mr.
Hawthorne, pursuant to which he was appointed the President and
Chief Executive Officer of Lodgian. The Employment Agreement
provides compensation and benefits consistent with those offered
to comparable executives in the marketplace and by large,
complex companies operating in Chapter 11. The salient terms of
Mr. Hawthorne's Employment Agreement are:
A. Term: Commences as of November 1, 2001, and continues to the
third anniversary of this date.
B. Compensation:
a. Base Salary: $400,000 per year.
b. Annual Bonus: Mr. Hawthorne is eligible to receive an
annual cash bonus of up to 100% of his Base Salary, but is
only eligible for a cash bonus of up to 50% of his Base
Salary for any year in which he is paid a Reorganization
Bonus.
c. Reorganization Bonus: If during the Employment Period and
for a period of 180 days following the Date of
Termination, Lodgian consummates a Successful
Restructuring, Mr. Hawthorne will be entitled to a cash
bonus of:
1. $900,000 if the Post Restructuring Equity Percentage is
greater that 1% but less that 10% on a fully diluted
basis; and
2. $1,200,000 if the Post Restructuring Equity Percentage
is 10% or more on a fully diluted basis.
C. Termination by Lodgian for Cause: If Mr. Hawthorne's
employment is terminated for Cause, the Employment Period
automatically terminates without any further obligation to
Mr. Hawthorne other than the obligation to pay him all
payments and benefits due, in accordance with Lodgian's Plans
through the Date of Termination.
D. Offset Rights: Lodgian has the right to offset the amounts
required to be paid to Mr. Hawthorne against any amounts owed
by Mr. Hawthorne to Lodgian.
E. Change of Control. In the event Lodgian terminates
Hawthorne's employment, or there is a material diminution of
his position, duties or benefits, within one year of a Change
of Control, Lodgian must make a cash payment to Mr. Hawthorne
equal to:
a. the greater of one and one-half times his Base Salary and
the Base Salary multiplied by the number of years
remaining in the Employment Period;
b. Mr. Hawthorne's Base Salary payable through the Date of
the Termination, to the extent not already paid;
c. Mr. Hawthorne's actual earned annual bonus, to the extent
not already paid;
d. reimbursement for any unpaid expenses; and
e. the unpaid portion of any amount Mr. Hawthorne earned
prior to the date of termination.
F. Release: As a condition for receiving payments and other
benefits relating to Termination, Change of Control and
payment of Excise Taxes, Mr. Hawthorne agrees to execute a
Separation and Release Agreement, releasing and discharging
the Debtors from any and all claims, charges or demands which
may have existed relating to Mr. Hawthorne's employment or
termination from employment with Lodgian.
G. Dispute Resolution: In the event of a dispute regarding the
terms and conditions of the Employment Agreement, the parties
agree to submit to an arbitration proceeding to be conducted
by the American Arbitration Association (AAA) in Atlanta,
Georgia. (Lodgian Bankruptcy News, Issue No. 8; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
MAGELLAN HEALTH: S&P Affirms B+ Counterparty Credit Rating
----------------------------------------------------------
Standard & Poor's said it revised its outlook on Magellan Health
Services Inc. to negative because the results of Magellan's
continuing operations in behavioral health managed care, now its
sole business, were considerably weaker in the six months ended
Dec. 31, 2001, than in the past several years.
At same time, Standard & Poor's said that it affirmed its
single-'B'-plus counterparty credit rating on Magellan.
"Magellan's near-term prospects for a return to the robust
operating results it had experienced in the past are poor," said
Standard & Poor's credit analyst Charles Titterton. Business
conditions have recently squeezed margins, particularly in
employee assistance programs. In addition, the significant loss
of covered individuals at Magellan's largest customer, Aetna
Inc., will affect revenue in the quarter ended March 31, 2002.
Magellan's leverage continues to improve slowly. Nevertheless,
in December 2001, management needed to obtain an amendment from
its bank group to a covenant in its credit agreement that called
for a decline in a key leverage ratio. Standard & Poor's
believes that if the current run rate of operating results does
not improve, Magellan might have to seek another amendment of
this covenant.
Ongoing concerns remain, including extremely high leverage,
contingencies arising from discontinued operations and a
concentration of business in two large customers that account
for more than 30% of revenue.
If results in the quarter ended March 31, 2002, adjusted for
normal seasonality, decline from those posted for the quarter
ended Dec. 31 2001, the ratings might be lowered, possibly by a
notch. On the other hand, Standard & Poor's could affirm the
ratings if Magellan can show operating income commensurate with
that recorded for the December quarter and can demonstrate that
it is on a path to profitability commensurate with historical
profitability levels from continuing operations.
Magellan remains by far the largest provider of behavioral
health managed care in the country and has generally maintained
its market share in the face of heavy competition. Although it
has faced complaints from covered individuals and health care
providers about control of provider networks, it appears to have
maintained a generally good reputation among the wide range of
companies and insurers that are its clients.
MARINER POST-ACUTE: Resolves Cribb/Fitzgerald Claims Dispute
------------------------------------------------------------
Debtors Mariner Post-Acute Network, Inc., Summit Medical
Holdings, Ltd. sought and obtained the Court's authority for
entry into the Stipulation and Agreement with Rembert T. Cribb
and Michael E. Fitzgerald that provides for, among other things,
(i) release of an escrow amount of $835,000.00 in connection
with Summit's acquisition of certain long term acute care
hospitals from Cribb/Fitzgerald, (ii) resolution of claims by
Cribb/Fitzgerald.
In June, 1998, Cribb/Fitzgerald, MPAN, and Summit entered into a
Merger Agreement pursuant to which Summit acquired the long term
acute care hospitals from Cribb/Fitzgerald. The Merger Agreement
provides for, among other things, (1) a working capital
adjustment; (2) Earn-Out Payments; and (3) the indemnification
of MPAN and Summit by Cribb/Fitzgerald for certain liabilities
(the "Indemnification Obligation"), including, but not limited
to, Medicare and Medicaid cost report liabilities. The
Indemnification Obligation was secured by certain monetary and
non-monetary consideration placed in escrow by Cribb/Fitzgerald
on the Closing Date (the Escrow Collateral).
In the following month, certain of the Debtors,
Cribb/Fitzgerald, and Reliance Trust Company (the Escrow Agent)
entered into the Escrow Agreement pursuant to which Escrow
Collateral, consisting of $835,000.00 in cash and certain shares
of common stock in Paragon Health Network, Inc. n/k/a Mariner
Post-Acute Network, Inc., was deposited into an escrow account
to secure the Indemnification Obligation of Cribb/Fitzgerald.
The Escrow Collateral has not been distributed and remains in
the Escrow Account with the Escrow Agent.
On or about September 8, 2000, Cribb filed two identical proofs
of claim, one in MPAN's chapter 11 case and one in Summit's
chapter 11 case, which have been assigned Claim Nos. 3875 and
3800, respectively, each asserting secured claims totaling at
least $8,866,124.00 and arising out of the Merger Agreement and
the Escrow Agreement. The secured claims are comprised of (1)
payments allegedly owing from MPAN and Summit on account of the
Working Capital Adjustment; (2) Earn-Out Payments allegedly
owing from MPAN and Summit based on the performance of the LTAC
hospitals acquired by MPAN and Summit pursuant to the Merger
Agreement and a settlement of certain liabilities; and (3) the
alleged obligation of MPAN and Summit to consent to the
distribution of the Escrow Collateral to Cribb/Fitzgerald
pursuant to the terms of the Escrow Agreement.
Fitzgerald filed two identical proofs of claim, one in MPAN's
chapter 11 case and one in Summit's chapter 11 case, which have
been assigned Claim Nos. 3874 and 3877, respectively, each
asserting a secured claim totaling at least $2,955,374.00 and
arising out of the Merger Agreement and the Escrow Agreement.
The Fitzgerald Proofs of Claim are based on similar assertions
as the Cribb Proofs of Claim.
The Debtors dispute the validity of certain of the claims
asserted in the Cribb/Fitzgerald Proofs of Claim. The Debtors
assert that they are entitled to payments from Cribb/Fitzgerald
as a result of the Working Capital Adjustment. Further, the
Debtors assert that any claims that Cribb/Fitzgerald may assert
for Earn-Out Payments would be more than offset by
Cribb/Fitzgerald's Indemnification Obligations to the Debtors.
The Settlement Agreement provides that, within 10 business days
after the Approval Order becomes a Final Order, the Debtors
shall authorize and direct the Escrow Agent to distribute the
contents of the Escrow Account to Cribb/Fitzgerald; provided,
however, that all fees and/or expenses owing to the Escrow Agent
under the Escrow Agreement shall have been satisfied in full.
Effective upon the receipt of the Settlement Amount,
Cribb/Fitzgerald on the one hand, and the Debtors, on the other
hand, will be deemed to have fully, finally, and forever
irrevocably released one another from any and all claims arising
from or in connection with the Merger Agreement, the Escrow
Agreement, or otherwise pertaining to the sale of the LTAC
hospitals to the Debtors pursuant to the Merger Agreement, the
Cribb Proofs of Claim, the Fitzgerald Proofs of Claim, or any
action or pleading filed in connection with any of these,
provided, however, that the release shall not apply to that
certain "Restated and Amended Lease Agreement" dated February 1,
1998 (the "Southwest Lease"), as amended to date, among
Southwest Medical Center, Inc. and Debtor Summit Institute for
Pulmonary Medicine and Rehabilitation, Inc. (Mariner Bankruptcy
News, Issue No. 29; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
MAXXAM INC: Full-Year 2001 Net Loss Burgeons to $456 Million
------------------------------------------------------------
MAXXAM Inc. (AMEX:MXM) reported a net loss of $508.0 million for
the fourth quarter of 2001, compared to net income of $35.4
million, for the fourth quarter of 2000. Net sales for the
fourth quarter of 2001 totaled $453.5 million, compared to
$565.0 million in the same period of 2000.
For the year ended December 31, 2001, MAXXAM reported a net loss
of $456.0 million, compared to net income of $33.9 million for
the same period of 2000. Net loss for the fourth quarter and
twelve months of 2001 includes Kaiser Aluminum's non-cash charge
of $505.4 million to increase valuation reserves on its deferred
tax assets in light of Kaiser's Chapter 11 reorganization
filing. MAXXAM holds 62% of Kaiser Aluminum.
Net sales for the year ended December 31, 2001 were $2,018.2
million compared to $2,448.0 million for 2000. MAXXAM reported
an operating loss of $99.4 million for the fourth quarter of
2001 and operating income of $45.4 million for the year ended
December 31, 2001, compared to operating income of $30.1 million
and $130.6 million for the comparable periods of 2000.
Impact of Kaiser Aluminum's Chapter 11 Reorganization
Kaiser Aluminum's decision to file for Chapter 11 reorganization
on February 12, 2002 has not had, nor is it expected to have, an
effect on the employees, vendors, or customers of MAXXAM's
forest products, real estate, and racing operations.
Excluding aluminum operations, MAXXAM experienced operating
losses of $14.1 million for the fourth quarter of 2001 and $25.4
million for the year ended December 31, 2001, compared to losses
of $19.4 million and $14.6 million for the comparable periods of
the year 2000.
With regard to net sales excluding aluminum operations, MAXXAM
recorded $78.2 million for the fourth quarter of 2001 and $285.5
million for the year ended December 31, 2001, compared to $68.9
million and $278.2 million for the comparable periods of the
year 2000.
Pursuant to generally accepted accounting principles (GAAP) and
prior to recognizing its share of Kaiser's losses in the fourth
quarter, MAXXAM's investment in Kaiser was recorded at $144.8
million. As a result of Kaiser's fourth quarter non-cash charge
described above, MAXXAM's investment in Kaiser as of December
31, 2001 is, in accordance with GAAP, being carried by the
company at negative $450.2 million.
In the financial statements for the first quarter of 2002, as a
result of Kaiser's Chapter 11 filing, MAXXAM expects to adjust
the book carrying amount of its Kaiser investment from negative
$450.2 million to $0.
Additional information regarding the book carrying amount of
MAXXAM's Kaiser investment can be found in MAXXAM's Form 10-K
which is being filed with the Securities and Exchange
Commission.
ALUMINUM OPERATIONS
Aluminum operations experienced an operating loss as a result of
continued weak fundamentals in the aluminum industry. Soft
demand, depressed pricing for alumina and primary aluminum, and
a decrease in shipments of primary aluminum contributed to the
decline. Operating results for the year ended December 31, 2001
also included several special charges totaling $35.2 million.
FOREST PRODUCTS OPERATIONS
Net sales for the fourth quarter of 2001 decreased from the
fourth quarter of 2000. Although the segment experienced
increased shipments of redwood common grade lumber, lower prices
for redwood and Douglas-fir lumber more than offset the
increased shipments. Operating results declined due to higher
costs associated with logging operations in addition to charges
of $7.5 million resulting from restructuring and performance
improvement initiatives.
The forest products segment experienced an operating loss for
the year ended December 31, 2001, compared to operating income
for the year ended December 31, 2000, with results negatively
impacted by lower lumber prices and a slight decrease in
shipments. Gross margins on lumber sales declined year to year
due to higher costs associated with lumber production and
logging operations. In addition, forest products incurred a
total of $8.2 million in charges relating to restructuring and
performance improvement initiatives (including the $7.5 million
mentioned above).
REAL ESTATE OPERATIONS
Net sales for the 2001 fourth quarter increased from the
comparable 2000 quarter. The segment experienced operating
income for the fourth quarter and year ended December 31, 2001,
compared to operating losses for the comparable prior year,
primarily due to the increase in net sales.
RACING OPERATIONS
Fourth quarter 2001 net sales declined slightly from the
previous year, while operating income showed a modest increase
due to cost control measures. The decrease in net sales was due
to lower net commissions at Sam Houston Race Park. This decline
was offset in part by an increase in net sales at Valley Race
Park.
CORPORATE
As previously announced in prior earnings statements, MAXXAM may
from time to time purchase shares of its common stock on
national exchanges or in privately negotiated transactions.
* * *
As previously reported in Troubled Company Reporter, Standard &
Poor's ratings on Maxxam Inc. and Pacific Lumber Co. remain on
CreditWatch with negative implications where they were placed
January 15, 2002. Maxxam Inc. guarantees the 12% senior secured
notes due Aug. 1, 2003, at its Maxxam Group Holdings Inc. (MGHI)
subsidiary. The actions on MAXXAM and Pacific Lumber reflect
concerns regarding Kaiser as well as issues affecting the wood
products business. Wood product market conditions are weak, with
oversupply and soft demand resulting in volatile pricing for
lumber and logs. In addition, the company has not always been
able to harvest at desired levels because the governmental
approval process has been slow, although it has reportedly
improved recently. Still, recent cost cutting measures and a
focus on unit cost optimization, should improve cash flow and
earnings coverages.
Although cash balances of $129 million at Maxxam Inc. and $36
million at MGHI as of September 30, 2001, are more than the
current outstandings of the MGHI notes and could be earmarked to
meet the August 1, 2003, maturity, heightened uncertainty exists
over whether these funds will be made available to meet the
maturity as well as a possible bankruptcy filing by Kaiser and
the ability of Kaiser's creditors to drag Maxxam into any
bankruptcy proceedings. In resolving its CreditWatch, Standard &
Poor's will review the operating conditions and financial
profile of Pacific Lumber and its ability to service the MGHI
debt as well as the aforementioned issues.
Ratings Remaining on CreditWatch
with Negative Implications
MAXXAM Inc. Ratings
Corporate credit rating B
Senior secured debt CCC+
Pacific Lumber Co.
Corporate credit rating B
Maxxam Group Holdings Inc.
Senior secured debt CCC+
(gtd. by MAXXAM Inc.)
MCCRORY: Obtains Approval to Extend Exclusivity through April 29
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware approved
a stipulation between McCrory Corporation and its Official
Committee of Unsecured Creditors to extend the Company's
exclusive period during which to file a plan of reorganization
and solicit acceptances of that plan.
The Debtors secured an extension until April 29, 2002 to file
their Plan of Reorganization and until June 29, 2002 to solicit
and obtain acceptances of the Plan.
McCrory Corporation filed for chapter 11 protection on September
10, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl,
Young & Jones P.C. represents the Debtors.
MICROFORUM: CCAA Plan Filing Period Extended through June 6
-----------------------------------------------------------
Microforum Inc. (TSE: MCF) obtained an order from the Ontario
Superior Court of Justice to extend the period the Company has
to file its Plan of Compromise or Arrangement with its creditors
until June 6, 2002 and obtained an extension of its protection
under the Companies Creditors Arrangement Act until July 31,
2002.
The Company also received Court approval for its claims
procedure to identify and quantify creditors claims in
connection with the Plan. The Company anticipates the claims
procedure to be successfully completed by no later than July 31,
2002.
Microforum also received Court approval of the conditional
settlement agreement the Company entered into with the landlord
for its corporate offices at 150 Ferrand Drive to reduce its
rental obligation. Terms of this conditional settlement are set
forth in the Company's press release dated April 8, 2002.
For additional information, a copy of the Affidavit filed in
support of the motion and Court order can be found on the
Company's Web site at http://www.microforum.com
Established in 1987, Microforum sells software solutions to
organizations that seek a competitive edge. The company is
listed on The Toronto Stock Exchange (TSE: MCF).
MPOWER: Seeks Court Approval to Retain Young Conaway as Counsel
---------------------------------------------------------------
Mpower Holding Corporation asks the U.S. Bankruptcy Court for
the District of Delaware for permission to engage the legal
services of Young Conaway Stargatt & Taylor LLP as its chapter
11 attorneys.
In its past representation of the Debtors and in preparing for
this case, Young Conaway has become familiar with the Debtors'
businesses and affairs and many of the potential legal issues
that may arise in the context of these chapter 11 cases. The
Debtors believe that Young Conaway is both well qualified and
uniquely able to represent them in these cases in a most
efficient and timely manner.
The Debtors agree to compensate Young Conaway professionas at
their customary hourly rates:
a) Pauline K. Morgan $380 per hour
b) M. Blake Cleary $290 per hour
c) Timothy E. Lenkeek $220 per hour
d) Michael V. Girello (paralegal) $125 per hour
Young Conaway received a $50,000 retainer in connection with the
planning and preparation of initial documents and their proposed
postpetition representation of the Debtors. The Debtors also
propose to reimburse Young Conaway with the necessary expenses
the firm incurred.
As the Debtors counsel, Young Conaway is expected to:
a) provide legal advice with respect to their powers and
duties as debtors in possession in the continued
operation of their businesses and management of their
properties;
b) negotiate, prepare and pursue confirmation of a plan and
approval of a disclosure statement, and all related
reorganization agreements/documents;
c) prepare on behalf of the Debtors necessary applications,
motions, answers, orders, reports, and other legal
papers;
d) appear in Court and to protect the interests of the
Debtors before the Court; and
e) perform all other legal services for the Debtors which
may be necessary and proper in these proceedings.
By separate application, the Debtors are seeking authority to
retain the firm of Shearman & Sterling as bankruptcy counsel.
Attorneys of both firms conferred regarding the division of
separate responsibilities in an effort to avoid the duplication
of tasks between them.
Mpower Holding Corporation and its affiliates are a facilities-
based communications company offering local dial tone, long
distance, Internet access via dial-up or dedicated Symmetrical
Digital Subscriber Line technology, voice over SDSL, Trunk Level
1. The Debtors filed its pre-negotiated chapter 11 plan of
reorganization and disclosure statement simultaneously with
their chapter 11 bankruptcy protection on April 8, 2002. Pauline
K. Morgan, Esq., M. Blake Cleary, Esq., Timothy E. Lengkeek,
Esq. at Young, Conaway, Stargatt & Taylor and Douglas P.
Bartner, Esq., Jonathan F. Linker, Esq. at Shearman & Sterling
represent the Debtors in their restructuring efforts. When
Mpower Holding filed for protection from its creditors, it
listed $490,000,000 in total assets and $627,000,000 in total
debts. Its debtor-affiliates, Mpower Communications listed
$831,000,000 in assets and $369,000,000 in debts; Mpower Lease
listed $242,000,000 in assets and $248,000,000 in debts.
MUTUAL RISK MANAGEMENT: S&P Junks Counterparty Credit Rating
------------------------------------------------------------
Standard & Poor's lowered its counterparty credit rating on
Bermuda-based Mutual Risk Management Ltd. to double-'C'
reflecting the highly vulnerable status of existing obligations
to nonpayment.
The rating remains on CreditWatch where it was placed on Dec.
12, 2001, with negative implications.
The Bermuda Monetary Authority has appointed a review team to
monitor Mutual Risk's business on an ongoing basis because the
company is in default under the terms of its convertible
exchangeable debentures and its bank credit facilities. It is
not clear whether further sales of assets will yield sufficient
proceeds to satisfy indebtedness. Its shares have been delisted
from the NYSE, and it is highly likely that Legion Indemnity
Co., Mutual Risk's triple-'C'-rated U.S. insurance subsidiary,
which is not yet under regulatory control, will fall under
regulatory control prospectively.
Management is trying to negotiate a restructuring plan with
existing creditors. If the company cannot restructure its debt
or reach some accommodation, it may be forced to liquidate
through proceedings in Bermuda and in the United States.
Legion Indemnity Co. had a policyholder surplus of $35.3 million
as of year-end 2001, and has participated in a pooling agreement
with its affiliates, Legion Insurance Co. and Villanova
Insurance Co. since 1996.
NATIONAL STEEL: Court Okays Dewey Ballantine as Special Counsel
---------------------------------------------------------------
National Steel Corporation and its debtor-affiliates obtained
the Court's authority to retain Dewey Ballantine as their
special international trade counsel to perform legal services
necessary during the Chapter 11 cases, nunc pro tunc to the
Petition Date.
Mark A. Berkoff, Esq., at Piper Marbury Rudnick & Wolfe, in
Chicago, Illinois, states that Dewy Ballantine continues to
provide services to the Debtors in connection with trade matters
and will provide other additional related services as may be
reasonable and appropriate.
According to Mr. Berkoff, Dewey Ballantine has provided and will
continue to provide services to the Debtors in connection with:
(a) The Flat-Rolled Producers' Coalition
Dewey Ballantine and the firm of Skadden, Arps, Slate,
Meagher & Flom have in the past served, and continue to
serve, as joint international trade counsel to a Coalition
of three United States producers of carbon steel flat-
rolled products in their ongoing efforts to secure and
obtain relief from injuries arising from increased imports
of these products and from unfair trade practices. The
Coalition was composed of the Debtors, Bethlehem Steel
Corporation and United States Steel Corporation. Skadden,
Arps and Dewey Ballantine divide the work, with each firm
handling separate issues arising in the steel industry's
Section 201 Case, and separate groups of anti-dumping and
countervailing duty cases on behalf of the Coalition.
(b) Unfairly Traded Steel and Injury from Increased Steel
Imports
Unfair trade practices by foreign steel producers and the
injury from increased steel imports are among the
principal reasons that the Debtors filed their Chapter 11
petitions. Not only the Debtors, but all of their
creditors and equity shareholders have a direct, immediate
and major interest in the success in the legal and public
policy efforts being undertaken by Dewey Ballantine on
behalf of the Coalition against unfairly traded imported
steel and the injurious effects of increased steel
imports.
(c) Others
Other legal remedies exist which from time to time the
Coalition has asked Dewey Ballantine and Skadden Arps to
examine the applicability to the problem of unfair trade
in steel. In addition, anti-dumping and countervailing
duty cases have a variety of domestic and international
policy ramifications. Skadden Arps and Dewey Ballantine
provide information to members of the Congress, contribute
to the development of legislation and advise the Coalition
on international negotiations related to these matters.
Dewey Ballantine LLP relates that prior to the Petition Date, it
was paid by the Coalition on the basis of a fee arrangement that
allocated fees based on each Coalition member's annual
production tonnage of products. Dewey Ballantine's fees were and
will continue to be discounted at a rate of 10% from normal
billing rates.
Prior to the Petition Date, Dewey Ballantine LLP reports that it
billed the Debtors $2,677,672 for services rendered and
disbursements and other charges incurred. As of the Petition
Date, the firm had outstanding bills to the Debtors for legal
services totaling $202,170. The Debtors have incurred $171,411
in charges from Dewey Ballantine from February 1, 2002 through
February 28, 2002.
Based on the hourly rates for its professionals and
paraprofessionals, plus reimbursement for reasonable and
necessary expenses, Dewey Ballantine is compensated at:
A. Attorneys Hourly Rate
--------- -----------
Wolff, A W $630
Howell, T R $563
Stein, M H $563
Ragosta, J A $540
Kentz, A W $518
Dempsey, K M $446
Magnus, J R $446
Ward, B L $419
Riccardi, J $405
Bohn, J W $365
Quirk, R $365
Sperber IV, J J $365
Andros, L $342
Bentley, D A $342
Hamilton, P $320
Yu, H $320
Friends, N $284
Gilroy, M J $284
Joneja, N $284
Avins, J $248
Calabrese, D B $203
LaSala, B $203
Rickard, N M $203
Rothenberg, L E $203
Welt, M M $203
Yocis, D A $203
Zeldovich, M S $203
B. Economists & Trade Analysts Hourly rates
--------------------------- ------------
Noellert, W A $410
Bartlett, B $356
Hester, S $356
Hume, G $338
Lutz, R $198
Brown, M J $171
Deneberg, S $171
Kawasaki, H $163
Hishikawa, M $162
Ramos, A $162
Richardson, B $158
C. Other Paraprofessionals Hourly Rates
----------------------- ------------
O'Connor, K $149
Howe, R S $144
Kajiwara, K $140
Mani, A $135
VanHeyningen, Z $135
Broen, F $122
Coakley, T $122
Hemnani, R $122
Murphy, M E $122
Proud, D $122
Taylor, S K $122
Robinson, C H $120
Holland, M P $113
Park, J $113
Ray, L $113
Smith, D A $113
Bhada, P $108
Boger, A $108
Carter, S $108
Kaufman, L $108
Kim, Y $108
Lee, K $108
Salgado, V $108
Ware, J W $108
Welch, N $108
Morrison, L $68
Wasicek, J $68
A conflict analysis was conducted and was determined that Dewey
Ballantine neither holds nor represents an interest adverse to
the Debtors or their estates. The firm is a pre-petition
creditor of the Debtors but otherwise has no connection to the
other creditors, any parties of interest or to the US Trustee.
Thus, Dewey Ballantine is a "disinterested person" as defined
under Section 101(14) of the Bankruptcy Code. (National Steel
Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
NATIONSRENT: Seeks Exclusivity Extension through August 16
----------------------------------------------------------
NationsRent Inc., and its debtor-affiliates ask the Court to
extend the exclusive periods during which they have the right to
file a reorganization plan and to solicit acceptances of that
plan by an additional four months. The requested extension
period would extend through and include August 16, 2002 for the
Exclusive Filing Period and October 16, 2002 for the
Solicitation Period.
Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, P.A.
in Wilmington, Delaware, points out that NationsRent is a large,
complex and geographically diverse organization. It is a
leading provider of rental equipment in the United States. They
operate approximately 230 rental centers in 27 states and have
approximately 3,300 full- and part-time employees.
Additionally, they have about $700,000,000 in assets and
$1,200,000,000 in liabilities. Given the size and complexity of
these cases, Mr. DeFranceschi contends that it is simply
unrealistic to expect that any party -- be it the Debtors or any
other party in interest - would be in a position to formulate,
promulgate and build consensus for a plan at this time. The size
and complexity of the Debtors' businesses, corporate structure,
financing arrangements and other related issues alone justify
extending the Exclusive Periods.
Mr. DeFranceschi notes that in the short three and 1/2 months
since the filing of these cases, the Debtors have achieved much
and accomplished a smooth transition into Chapter 11. From the
very outset of these cases, the Debtors have worked tirelessly
to effectuate a smooth transition into bankruptcy and to
minimize the disruption to their businesses, employees, vendors,
customers, lessors and landlords occasioned by their Chapter 11
filings.
Mr. DeFranceschi names the Debtors' notable successes in a
variety of matters as evidence:
A. The Debtors have obtained various "first day" relief to
ensure that their businesses remain stable and that the
Debtors' reorganization efforts move forward and, since
petition date, the Debtors have retained professionals
necessary to those efforts;
B. The Debtors implemented an equipment lease review program in
order to determine which of their equipment leases they
intend to assume, reject, re-characterize or renegotiate and
as part of this program. They entered into stipulations,
addressed adequate protection needs asserted by certain
equipment lessors, and identified appraisal and audit firms
to assist them in their comprehensive review of these leases;
C. The Debtors have obtained final approval of a $55,000,000 DIP
financing facility. This has addressed the Debtors'
liquidity needs and helped to assure the Debtors' vendors,
customers, lessors and other constituents that the Debtors'
businesses will remain stable;
D. The Debtors have established a positive working relationship
with the Lenders and the Creditors' Committee in an effort to
limit the number of contested matters presented to the Court.
They have assisted them in their evaluation of various
aspects of the Debtors' businesses by providing materials in
response to various due diligence requests and by providing
access to management;
E. The Debtors have also worked extensively with the Lenders,
the Creditors' Committee and certain other creditor
constituencies to obtain the approval of the assumption of
their strategic alliance agreement with Lowe's Companies.
This is a significant arrangement that the Debtors believe
will be an important component of any reorganization plan;
F. After extensive consultation with the Lenders and the
Creditors' Committee, the Debtors secured approval of key
employee retention and severance programs in an effort to
ensure that key management employees remain with the Debtors
and are focused on a successful reorganization;
G. The Debtors recently completed the process of compiling vast
amounts of information required for their statement of
financial affairs and schedules of assets and liabilities;
H. The Debtors have been reviewing and revising their business
plan since the petition date so as to aid in the formulation
of a Chapter 11 plan. They anticipate that they will work
with the Lenders and the Creditors' Committee to refine this
business plan and to develop a new capital structure that
will serve as the basis for any such proposed plan; and,
I. The Debtors have begun the search process for a new CEO to
replace James L. Kirk, who resigned shortly after the
petition date.
Mr. DeFranceschi relates that after having achieved a smooth
transition, the Debtors intend to build on it as they enter the
next stage of these cases. For them, the next stage is the
further stabilization of their business operations and, with the
assistance of the Lenders and the Creditors' Committee, the
refinement of a business plan that will become the cornerstone
of a Chapter 11 plan.
Mr. DeFranceschi assures the Court that the requested extension
will not prejudice creditors or other interested parties. In
fact, neither the Debtors' creditors nor any party in interest
realistically would be in a position to propose a plan that is
likely to be acceptable in to the Lenders and the Creditors'
Committee prior to August 16, 2002. The extension will not
result in a delay of the plan process; rather, it will simply
permit the process to move forward in an orderly fashion,
consistent with the Congressional intent underlying Section 1121
of the Bankruptcy Code.
A hearing of this Motion is set for April 26, 2002, and, by
application of Local Rule 9006-2, the Debtors' exclusive period
automatically extends through the conclusion of that hearing.
(NationsRent Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
NIASKI ENVIRONMENTAL: Shares Knocked-Off CDNX Listing
-----------------------------------------------------
Effective at the close of business Friday, April 12, 2002, the
common shares of Niaski Environmental Inc. were delisted from
CDNX for failing to maintain Exchange Listing Requirements. The
securities of the Company have been suspended in excess of
twelve months.
PACIFIC GAS: Court Tentatively Approves Disclosure Statement
------------------------------------------------------------
At the April 11 hearing, Judge Montali tentatively approved the
modified Second Amended Disclosure Statement filed in support of
the Chapter 11 plan of reorganization proposed by Pacific Gas
and Electric Company and PG&E Corp. Judge Montali finds that
the document -- which he quips about having trouble lifting from
time-to-time -- complies with 11 U.S.C. Sec. 1125. The
Proponents' Disclosure Statement, Judge Montali rules, contains
adequate information and sufficient detail to allow creditors to
make an informed judgment about whether they should vote to
accept or reject the Plan.
Judge Montali directs that April 19 is the deadline for the
Proponents to file the final draft of their reorganization plan
and disclosure statement incorporating changes made during the
past two weeks.
The CPUC's deadline was yesterday, April 15, 2002, to submit its
plan of reorganization for PG&E. Judge Montali will convene a
hearing on April 24 to work out the mechanics of the process for
voting on the plans. May 3 will be the deadline for parties to
file objections to the CPUC's plan. The Parties will return to
court on May 9 for a hearing to assess the adequacy of the
CPUC's Disclosure Statement. If the Parties will adhere to this
schedule, June 17 is the target date for the start of the voting
period. (Pacific Gas Bankruptcy News, Issue No. 30; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
PILLOWTEX: Sues Westpoint Stevens for Breach of License Pact
------------------------------------------------------------
Pillowtex Corporation, and its debtor-affiliates seek damages
from Westpoint Stevens Inc. arising from the breach of a license
agreement.
Michael R. Lastowski, Esq., at Duane Morris, in Wilmington,
Delaware, relates that the Debtors, Ralph Lauren Home Collection
Inc. and Polo Ralph Lauren Corporation are parties to a license
agreement. The License Agreement terminated on June 30, 2001 and
was not subject to renewal. Under the Agreement, the Debtors
had the right for a specified period after the termination to
dispose of licensed products, which were on hand or in the
process of being manufactured at the time of the termination.
However, Mr. Lastowski states, Ralph Lauren replaced the Debtors
with Westpoint for the manufacture and sale of their bedding
products and related accessories after the termination of the
agreement. Thus, the Debtors, Ralph Lauren and Westpoint
entered into a Sale Agreement. Mr. Lastowski explains that the
Sale Agreement was to provide Ralph Lauren assurance of a smooth
transition from the Debtors to Westpoint and to provide the
Debtors with assurance that its current and discontinued
inventory of the licensed products would be sold on favorable
terms. In addition, Mr. Lastowski reports that the Sale
Agreement also serves as consideration of the Debtors'
assumption of the License Agreement and the related payment to
Ralph Lauren of approximately $1,600,000 in cure amounts under
the License Agreements.
Under the Sale Agreement, Westpoint's obligations were:
(i) the duty to purchase within a specified time and at a
price equal to the Debtors' cost to manufacture, specified
amounts of discontinued inventory, current inventory,
additional discontinued inventory and new products, as
well as certain of the Debtors' inventory of related raw
materials such as buttons and zippers. Specifically,
Westpoint agreed to purchase the following amounts of
inventory as:
(a) an aggregate of $1,600,000 in discontinued inventory
by March 30, 2001 and an additional $1,300,000 by June
30, 2001;
(b) all of the Debtors' unsold current inventory of items
purchased or manufactured in connection with Ralph
Lauren House's Spring 2001 carryover forecasts along
with an overage allowance; plus, all remaining raw
materials purchased in connection with the 2001
forecasts; and
(c) all of the Debtors' remaining new products that were
manufactured in connection with the Spring 2001
forecasts along with an overage allowance; plus, all
remaining raw materials purchased for the 2001
forecasts.
Mr. Lastowski tells the Court that at the time of the Sale
Agreement, the Debtors had placed Westpoint on credit hold for
failure to pay amounts due in a timely manner. "Westpoint
breached its obligations under the Sale Agreement by failing to
take the inventory it is required to purchase," Mr. Lastowski
says. Westpoint alleges that the Sale Agreement was terminated
when the Debtors and Ralph Lauren entered into a Settlement
Agreement without their consent. However, the Debtors
reiterates that the Settlement Agreement settled issues between
the Debtors and Ralph Lauren and had no effect on Westpoint or
its obligations under the Sale Agreement.
According to Mr. Lastowski, Westpoint has, in material breach of
its obligations under the Sale Agreement:
(i) failed to make timely payment to the Debtors for certain
inventory ordered by Westpoint and delivered to them by
the Debtors;
(ii) failed and refused to timely order inventory from the
Debtors as required by the Sale Agreement;
(iii) failed and refused to purchase and pay for inventory and
raw material from the Debtors as required by the Sale
Agreement; and
(iv) wrongfully asserted that the Sale Agreement had
terminated and wrongfully refused to perform its
purchase obligations using such purported termination as
its excuse.
Furthermore, Westpoint was in continuous breach of the Sale
Agreement due to its failure to pay amounts owed to the Debtors
on the credit terms under the Agreement.
As a result of Westpoint's material breaches of the Sale
Agreement, the Debtors have suffered and continue to suffer
significant monetary injury. Despite this mitigation, Mr.
Lastowski asserts that Westpoint is still liable to the Debtors
in an amount exceeding $4,800,000.
"Due to Westpoint's breach of contract, the Debtors were forced
to continue to operate a facility that was supposed to be
completely closed already, thus incurring all the resulting
expenses," Mr. Lastowski adds. It has also precluded the
Debtors from proceeding with their plan to sell the facility for
the benefit of its estates. Finally, Mr. Lastowski states that
Westpoint's breach has required the Debtors to spend additional
sums relating to the Debtors' sales force, executive and
administrative staffs.
Therefore, the Debtors ask the Court to award them actual,
consequential, compensatory and other damages, award them pre-
judgment and post-judgment interest, and award them costs and
attorneys' fees. (Pillowtex Bankruptcy News, Issue No. 25;
Bankruptcy Creditors' Service, Inc., 609/392-0900)
PRECISION SPECIALTY: Court Extends Time to File Plan to June 30
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of
Delaware, the exclusive period during which Precision Specialty
Metals, Inc. may propose and file a plan of reorganization is
extended through June 30, 2002. The Court also gives the Debtor
the exclusive right, through August 27, 2002, to solicit
acceptances of that Plan.
Precision Specialty Metals is a specialty steel conversion mill
engaged in re-rolling, slitting, cutting and polishing stainless
steel and high- performance alloy hot band into standard or
customized finished thin-gauge strip and sheet product. The
Company filed for Chapter 11 petition on June 16, 2001 in the
U.S. Bankruptcy Court for the District of Delaware. Laura Davis
Jones, Esq. at Pachulski, Stang, Ziebl, Young & Jones P.C.
represents the Debtor on its restructuring efforts.
PRINTING ARTS: Secures Okay to Hire Held Kranzler as Accountants
----------------------------------------------------------------
Printing Arts America, Inc. and its debtor-affiliates ask the
U.S. Bankruptcy Court for the District of Delaware to retain
Held, Kranzler, McCosker & Pulice, LLP as their accountants,
nunc pro tunc to February 28, 2002, for certain tax and auditing
services.
The Debtors seek to retain and employ Held Kranzler to perform a
limited scope audit of the Debtors' statements of net assets
available for plan benefits of the Printing Arts America, Inc.
401(k) Retirement Plan as of December 31, 2001 and to prepare
the Retirement Plan's Form 5500, including required schedules.
The Debtors also seek to retain Held Kranzler to prepare the
Debtors' December 31, 2001 year-end federal consolidated tax
return and state corporate tax returns.
The Debtors propose to compensate Held Kranzler for its
services:
i) For the 401(k) Services, the Debtors will pay Held
Kranzler a $2,500 retainer upon court approval. In
addition, Held Kranzler will charge for its services on
an hourly basis, at an average hourly rate of $150. The
total amount charged shall not exceed $12,500;
ii) For the Tax Return Services, the Debtors will pay Held
Kranzler a $10,000 retainer upon approval of this
Application. In addition, Held Kranzler will charge for
its services on an hourly basis, at an average hourly
rate of $150. The total amount charged shall not exceed
$92,500.
Printing Arts America, Inc. filed for chapter 11 protection on
November 1, 2001 in the U.S. Bankruptcy Court for the District
of Delaware. Teresa K.D. Currier, Esq. and William H. Schorling,
Esq. at Klett Rooney Lieber & Schorling represent the Debtors in
their restructuring efforts. When the Company filed for
protection from its creditors, it listed estimated assets and
debts of more than $100 million.
PROVANT: IIR Withdrawals Proposal to Buy Outstanding Bank Debt
--------------------------------------------------------------
Irvine Laidlaw, Chairman of the Institute for International
Research (IIR), announced April 4, 2001, that IIR is withdrawing
its proposal previously made to the Board of Directors of
Provant, Inc. to acquire the outstanding bank debt of Provant
and to offer existing Provant shareholders the option to
exchange up to 50% of their existing shares of common stock for
$1.00 cash per share.
Mr. Laidlaw indicated that IIR is withdrawing its proposal at
this time after considering, among other things, Provant's
recent announcement regarding a number of business developments
at Provant, including the lowered 2002 fiscal year revenue
guidance.
Mr. Laidlaw stated: "Although we have not had the opportunity to
do due diligence, it would appear that the profitability and
financial position of Provant is deteriorating, and that our
original enterprise valuation of the company can no longer be
justified. We retain our long-term interest in the assets of
Provant, but need to be satisfied that the business has
stabilized. This does not appear to have happened to date."
Institute for International Research is the largest provider of
corporate training in the world, with brands such as Achieve
Global, ESI and Huthwaite. It is an independent, privately-owned
company with offices in more than 25 countries that delivers
strategic, legal, technical, product and financial information
to business professionals via a network of conferences and
events.
PROVANT's training programs help large and medium-sized
companies learn, so they can earn. PROVANT, a group of more than
20 training companies, offers classroom instruction and training
programs, as well as technology-based training via CD-ROM, the
Internet, and intranets. Programs include human resources
training, performance skills, spoken communication, and customer
service improvement. PROVANT also offers management consulting
services. PROVANT serves more than 1,500 companies and
government bodies (federal government work accounts for 15% of
sales). The company was formed in 1998 from the combination of
seven smaller firms; since then it has bought more than a dozen
others. However, now PROVANT is considering putting itself up
for sale.
SAFETY-KLEEN: UST Amends & Expands Official Creditors' Committee
----------------------------------------------------------------
Pursuant to Section 1102(a)(1) of the Bankruptcy Code, Donald F.
Walton, the Acting United States Trustee, amends and expands the
membership of the Official Committee of Unsecured Creditors, in
Safety-Kleen Corp.'s chapter 11 cases, to:
1. Wilmington Trust Company, as Indenture Trustee
1100 North Market Street
Wilmington, DE 19890
Attn: Steven Cimalore, Vice President
Phone: (302) 636-6058
Fax: (302) 636-4143;
2. Cole Taylor Bank, Trust & Investment Management
111 West Washington Street, Suite 650 \
Chicago, IL 60602
Attn: Ann Longino
Phone: (312) 960-5375
Fax: (312) 960-5396;
3. Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, NY 10017
Attn: Mr. Roi G. Chandy
Phone: (212) 916-6139
Fax: (212) 916-6140;
4. Holnam, Inc.
6211 Ann Arbor Road
Dundee, MI 48131
Attn: John V. Heffernan
Phone: (734) 529-4323
Fax: (734) 529-3703;
5. Creamer Investments, Inc., f/k/a Ract, Inc.
136 East South Temple, Suite 1300
Salt Lake City, UT 84111
Attn: Jean I. Everest, II
Phone: (801) 236-9700
Fax: (801) 236-9730;
6. New Pig Corporation
One Pork Avenue
Tipton, PA 16684
Attn: Bernard Edward Stapelfeld
Phone: (814) 684-0133
Fax: (814) 684-4813;
7. Wells Fargo Bank Minnesota N .A.
Sixth & Marquette, Corporate Trust Services
Mailstop MAC N930 3-120
Minneapolis, MN 55 479
Attn: Julie J. Becker, Vice President
Phone: (612) 316-4772
Fax: (612) 667-4425; and
8. IBM Credit Corporation
North Capital Drive
Armonk, NY 10504
Attn: Bruce Gordon, Project Manager, Restructuring
Phone: (914) 765-6232
Fax: (914) 765-6265.
(Safety-Kleen Bankruptcy News, Issue No. 31; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
STROUDS INC: Del. Court Confirms Proposed Plan of Liquidation
-------------------------------------------------------------
The previously disclosed Plan of Liquidation of Strouds, Inc.
was confirmed pursuant to an order of the United States
Bankruptcy Court for the District of Delaware on March 4, 2002.
The Plan provides, among other things, that holders of equity
interests in the Company (including shares of the Company's
common stock) will not receive or retain any interest, property
or other consideration under the Plan. The Plan also provides
that, on the effective date of the Plan, all equity interests in
Strouds, Inc. shall be extinguished and the certificates and
other documents representing such equity interests shall be
deemed cancelled and of no force or effect. The effective date
for the Plan occurred on March 20, 2002.
Accordingly, all shares of the Company's common stock (and other
equity interests in the Company) have, pursuant to the Plan,
been extinguished.
Strouds sells bed, bath, and kitchen textiles (sheets,
comforters, pillows, blankets, and towels) at 50 Strouds stores
in four states, primarily California. Strouds' superstores offer
high-quality, designer, private-label (Strouds Essentials), and
name-brand merchandise, while its outlet stores carry discounted
overruns, closeouts, and specialty products. Strong competition
forced Strouds to file for Chapter 11 bankruptcy protection in.
In mid-2001 some senior executives and Cruttenden Partners, a
private investment firm, purchased substantially all of Strouds'
assets for about $40 million.
STANDARD AUTOMOTIVE: Lenders' Agent Seeks Chapter 11 Trustee
------------------------------------------------------------
The agent for Standard Automotive Corp.'s lenders is asking a
bankruptcy court to appoint a chapter 11 trustee to oversee the
company's case, saying company management has acted
4irresponsibly and that a trustee is necessary to protect the
lenders' collateral and sell it efficiently. In a motion filed
on April 5, PNC Bank N.A., said John Elliott II, Standard
Automotive's chief executive and a director of the company, "has
engaged in a pattern and practice of irresponsible behavior."
When Standard Automotive filed for bankruptcy on March 19, the
company and its units owed their bank group more than $95
million. The assets of the company and the subsidiaries have
been pledged to secure pre-petition debt to the lenders. The
U.S. Bankruptcy Court in Manhattan has scheduled a hearing for
April 24 to consider the agent's motion for a chapter 11
trustee. Standard Automotive listed assets of about $113.9
million and debts of about $125 million as of September 30,
2001. (ABI World, April 10, 2002)
TEMBEC: Temlam Inc. Intends to Acquire Scierie Amos Sawmill
-----------------------------------------------------------
Temlam Inc. confirmed its intention of acquiring the Scierie
Amos sawmill, located in the Abitibi Region of Quebec. The terms
and conditions of this transaction will shortly be finalized
with the current owner.
Temlam Inc. also entered into the necessary agreements to
consolidate its hardwood supply from public forests, private
forests and intra-municipal lots in the Abitibi Region. This
hardwood supply consolidation and the acquisition of the Scierie
Amos sawmill will enable Temlam Inc. to pursue its objective of
establishing a laminated veneer lumber (LVL) plant in the
Abitibi Region.
Established in August 2001, Temlam Inc. is a 50/50 joint venture
between Tembec -- http://www.tembec.com-- and SGF Rexfor --
http://www.sgfqc.com Temlam Inc. owns seven plants in Quebec,
Ontario and Alberta and distributes its engineered wood products
primarily in Canada and the United States. Its total annual
sales are estimated at 140 million dollars and the Company's
objective is to become a leading supplier of engineered wood
products and to increase its share of this growing market
sector.
* * *
As reported in the March 08, 2002 edition of Troubled Company
Reporter, Standard & Poor's assigned a BB+ rating to Tembec
Inc.'s proposed US$275.0 million senior unsecured notes. The
rating reflects its competitive cost structure within the
cyclical, commodity-oriented forest products industry; its
aggressive, yet measured, growth strategy; and its good revenue
diversity. These strengths are offset by Tembec's currently high
debt levels.
TIME WARNER: Names Catherine Hemmer as Corporate Operations EVP
---------------------------------------------------------------
Time Warner Telecom, a leader in providing metro and regional
optical broadband networks and services to business customers,
today named Catherine Hemmer to the position of Executive Vice
President for Corporate Operations, effective April 15, 2002.
Ms. Hemmer comes to Time Warner Telecom from Covad
Communications where she was Executive Vice President and Chief
Operating Officer.
At Time Warner Telecom, Ms. Hemmer will lead the company's
National Operations Centers, which includes customer care,
ordering, provisioning, maintenance, and IP services as well as
engineering and planning functions. During her 25-year career,
Ms. Hemmer has worked for U S WEST, Ameritech Services, Inc.,
MCI, and MFS Telecom, Inc., compiling impressive corporate
operating results.
"I am pleased to bring in someone with Cathy's background and
experience to Time Warner Telecom," said Larissa Herda,
Chairman, President and CEO, Time Warner Telecom. "She has the
ability to take us to the highest levels of excellence and
efficiency."
Ms. Hemmer is filling the position vacated by Pat Gorman in
March 2002.
Time Warner Telecom is a subsidiary of Time Warner Telecom Inc.,
(Nasdaq: TWTC) headquartered in Littleton, Colorado. Time Warner
Telecom delivers "last-mile" broadband data, dedicated Internet
access and voice services for businesses in 21 states. One of
the country's premier competitive telecom carriers, Time Warner
Telecom delivers broadband services to large and medium
customers in 44 U.S. metropolitan areas over its fast, powerful
and flexible, fiber, facilities-based metro and regional
optical networks. Please visit the company's Web site at
http://www.twtelecom.comfor more information.
As reported in the March 8, 2002 edition of Troubled Company
Reporter, Standard and Poor's revised the outlook on competitive
local exchange carrier Time Warner Telecom Inc. to negative from
stable. S&P also affirmed the company's B+ credit rating. Total
debt outstanding for Littleton, Colorado-based TWT was $1.1
billion at December 31, 2001.
The outlook revision was based on the company's increased
business risk resulting from the impact the weakening domestic
economy has had on its business base. Many of TWT's carrier
customers have reduced their purchases as they have groomed and
resized their networks to control spending in the face of
weakening demand for telecom services. Moreover, certain
carriers and large enterprise customers have either filed for
bankruptcy or experienced other financial difficulties, causing
them to disconnect from TWT's network. Because of these factors,
prospects over the next few years are somewhat uncertain,
despite the company's ability to generate a relatively healthy
level of growth in revenues and operating cash flows in 2001.
TRICO STEEL: Gets Extension to July 19 to File a Chapter 11 Plan
----------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware granted
Trico Steel, LLC, an extension of its exclusive periods during
which to file a Plan of reorganization and to solicit
acceptances of that Plan. The Debtor's Exclusive Filing Period
is extended through July 19, 2002 and its Exclusive Solicitation
Period runs through September 20, 2002.
Trico Steel Company, LLC filed for chapter 11 protection on
March 27, 2001 in the U.S. Bankruptcy Court for the District of
Delaware. Edward J. Kosmowski, Esq. and Michael R. Nestor, Esq.
at Young Conaway Stargatt & Taylor represent the Debtor in its
restructuring effort.
TRUSERV CORPORATION: Fiscal 2001 Net Loss Tops $50 Million
----------------------------------------------------------
TruServ Corporation reported financial results for fiscal year
2001, the month of December 2001 and the fourth quarter of
fiscal year 2001, as well as for January and February 2002.
For the fiscal year ended Dec. 31, 2001, TruServ reported a net
loss of $50.7 million, attributable to one-time charges
including restructuring charges, inventory write downs and
refinancing fees. Excluding these one-time charges, the
cooperative achieved an operating profit of $6.7 million.
Revenues for 2001 were $2.6 billion, which is down 10.7 percent
compared with comparable business unit sales in 2000. Sales for
2001 declined 34.4 percent compared with reported sales for
2000, which included a lumber business disposal on Dec. 31,
2000.
Because approximately $37 million of these charges were taken in
December 2001, TruServ reported a net loss for the fourth
quarter of $36.8 million and a net loss of $46.7 million in
December.
The stage is set for 2002 profitability
Year-to-date through February 2002, TruServ reported a net
profit of $2.6 million. "TruServ operated at a profit in two of
the slowest sales months in the calendar," said David Shadduck,
chief financial officer of TruServ. "Even more critical is the
fact that we made money on lower sales, proving our cost
reductions are having the desired effect of lowering our break-
even point."
Combined sales in January and February were $334.5 million,
compared with $405.3 million for the same period a year ago. Net
profit for the period improved $14.2 million compared with a
loss of $11.6 million for the same period a year ago. Shadduck
explained that the co-op benefited from lower interest expenses
and lower overhead expenses than in the prior year's period.
Pamela Forbes Lieberman, TruServ's president and chief executive
officer, said the one-time charges taken in fiscal year 2001
were a necessary step toward setting the cooperative on the path
to profitability in 2002 and beyond. She noted that the
company's balance sheet continues to strengthen, with year-end
total debt of $457 million (net of available cash on hand),
which is 49.5 percent lower than its high of $905 million in
February 1999.
The cooperative's recent signing of amendments to its senior
debt agreements was another very significant step, reflecting
the lending community's acknowledgement of TruServ's financial
progress, she said. It also paved the way for a clean opinion
from the co-op's independent accountants for the 2000 and 2001
financial statements. All of these improvements set the stage
for an expected profit of $15 million to $20 million in 2002,
she said. "This range is based on forecasted sales of $2.3
billion."
Reduced cost structure contributes
to January and February 2002 profitability
Shadduck added that the co-op continues to reduce its cost
structure to drive profitability. "We made some hard decisions
in 2001 to ensure our profitability in 2002 and beyond," he
said. "We're gratified to see the desired effects of our
strategy so early in 2002."
TruServ continues to pursue a number of key initiatives to
reduce debt and increase profitability, including the potential
sale of a majority interest in its paint manufacturing business,
Forbes Lieberman said.
New strategic initiatives in MRO and rental
to fuel member growth, enhance retention
TruServ also has two new initiatives for 2002: the growth of the
MRO (Maintenance, Repair and Operations) business and the growth
of the rental business.
MRO
"The MRO initiative is focused on a highly fragmented, $350
billion industry primed for our members to take a larger share,"
Forbes Lieberman said. With 7,000 locations, an award-winning
Internet Custom Catalog, buying power of a $2 billion enterprise
and strong vendor relationships, TruServ is building a national
accounts business in which it will be a business development arm
for its members as it pursues providing parts and supplies to
large regional and national business enterprises and
governmental institutions. Under the direction of Fred Kirst,
vice president of MRO, TruServ will further strengthen its
capabilities in this area, she said.
Rental
"We know equipment rental better than any of our competitors,"
Forbes Lieberman said. A program that has traditionally achieved
high investment returns and profitability for members, rental
will be "re-energized," Forbes Lieberman said, through an
initiative to accelerate the number of members the co-op can
help to install or grow the rental business under the True
Value, Taylor Rental, Grand Rental Station and Party Central
brands. At TruServ's recent hardware market in Dallas, more than
200 rental vendors occupied 400 booths to answer questions and
take members' orders. Also, two rental Demo Days provided hands-
on training on everything from operating earth-moving machines
to raising large-scale party tents. Twenty different rental
seminars guided members through all aspects of the business,
from start-up to catering a wedding.
Focused on serving the independent hardware dealer
"As we move forward in 2002, TruServ is more sharply focused on
helping our members thrive at retail," Forbes Lieberman said.
"With fill rates at industry-leading levels, a broad product
offering and the best retail solutions in the industry, we're
laser-focused on the needs of the independent hardware dealer."
TruServ, headquartered in Chicago, is one of the world's largest
member-owned wholesale hardware cooperatives with 2001 sales of
$2.6 billion. The TruServ cooperative includes approximately
7,000 independent retailers worldwide operating under the store
identities of True Value, Grand Rental Station, Taylor Rental,
Party Central, Home & Garden Showplace and Induserve Supply.
Additional information on TruServ and its retail identities is
available at http://www.truserv.com
As previously reported, TruServ Corp. at September 30, 2001, had
a working capital deficit of about $177 million.
TRUSERV CORP: Amends Senior Note and Credit Facility Agreements
---------------------------------------------------------------
TruServ Corporation announced that it signed various amendments
to its existing senior note and revolving credit facility
lending agreements. The amendment with the revolving credit
facility extends the term of the facility from June 2002 to June
2004. The amount of the commitment remains at $200 million. The
amendments on the various senior notes maintain the existing
debt amortization schedules of the various notes.
Pamela Forbes Lieberman, TruServ's president and chief executive
officer, said the cooperative was able to secure the agreements
because the co-op has been successful implementing its
restructuring plan and is demonstrating progress in turning
around the business. She noted that during 2001, TruServ reduced
inventory by nearly $110 million and trimmed its total debt (net
of available cash on hand) by almost $97 million to $457
million.
"The completion of these financing amendments is a crucial step
toward restoring the financial strength and profitability of
TruServ," said Forbes Lieberman. "With financing in place, our
management team is clearly focused on our members' needs and our
key initiatives to improve the co-op's performance," she added.
TruServ will file the amendments to their senior debt agreements
with the Securities and Exchange Commission as exhibits to its
year ended Dec. 31, 2001 Annual Report on Form 10-K.
With the amendments in place, TruServ's independent accountants,
PricewaterhouseCoopers, will issue an unqualified opinion on the
co-op's 2000 and 2001 financial results.
TruServ, headquartered in Chicago, is one of the world's largest
member- owned wholesale hardware cooperatives. The TruServ
cooperative includes approximately 7,000 independent retailers
worldwide operating under the store identities of True Value,
Grand Rental Station, Taylor Rental, Party Central, Home &
Garden Showplace and Induserve Supply. Additional information on
TruServ and its retail identities is available at
http://www.truserv.com
U.S. AGGREGATES: Wins Final Approval of $17.5MM DIP Facility
------------------------------------------------------------
U.S. Aggregates, Inc., (OTC Bulletin Board: AGAT) announced that
on April 1, 2002, Judge Gregg W. Zive of the U.S. Bankruptcy
Court in Reno, Nevada issued an order approving on a final basis
a $17.5 million debtor-in-possession (DIP) financing facility
between U.S. Aggregates and certain of its pre-petition lenders.
The DIP financing facility, which consists of $10 million in
revolving loans and $7.5 million in letters of credit, will
enable the company to operate its business in the ordinary
course for one year, or until the sale of its assets is
consummated, whichever comes first.
U.S. Aggregates also announced that on April 9, 2002, Judge Zive
issued an order approving bidding and other sale procedures for
the proposed sale of the company's assets pursuant to Section
363 of the U.S. Bankruptcy Code. A key element of this process
will be a competitive bidding auction at which all qualified
parties can, and are encouraged to, bid for the assets of the
entire company or those of its Western or Southeastern business.
In addition, U.S. Aggregates announced that on April 2, 2002,
the waiting period under the Hart-Scott-Rodino Act of 1976
expired without inquiry by the Federal Trade Commission or the
Department of Justice. The waiting period pertained to the
notices filed in accordance with United States anti-trust laws
by U.S. Aggregates and Oldcastle Materials Inc. regarding the
pending sale of U.S. Aggregates' assets. Expiration or
termination of the waiting period was a condition to the sale of
the company's assets to Oldcastle Materials, which sale remains
dependent on the results of the competitive bidding auction
described above.
As was announced in a press release dated March 11, 2002, U.S.
Aggregates has entered into an agreement for the sale of all its
and its subsidiaries' assets to Oldcastle Materials, Inc. for
approximately $140,750,000. The agreement is subject to
bankruptcy court approval and the bidding process described
above. Proceeds received from the sale of U.S. Aggregates'
assets will be applied to the payment of certain liabilities not
assumed by the buyer, including any funds drawn from the DIP
financing facility, and the payment of the company's pre-
petition senior secured debt. Currently, U.S. Aggregates' pre-
petition senior secured debt exceeds the total estimated
proceeds to be received from the sale of its remaining assets.
The senior secured debt prior to establishment of the DIP
financing facility amounted to approximately $155,000,000.
Unsecured debt claims are estimated to be in excess of
$75,000,000.
Founded in 1994, U.S. Aggregates, Inc. is a producer of
aggregates. Aggregates consist of crushed stone, sand and
gravel. The company's products are used primarily for
construction and maintenance of highways and other
infrastructure projects as well as for commercial and
residential construction. USAI serves local markets in nine
states in two regions of the United States, the Mountain states
and the Southeast.
U.S. STEEL CORP: Selling North VA Assets of Mining Company Unit
---------------------------------------------------------------
United States Steel Corporation (NYSE: X) announced that it has
signed a letter of intent to sell assets of U. S. Steel Mining
Company, LLC (USM) to a newly formed company to be organized and
managed by Benjamin M. Statler LLC or its affiliates and Natural
Gas Partners VI, L.P.
The new company is expected to acquire all of the coal and
related assets associated with USM's Pinnacle No. 50 mine
located near Pineville, W.Va., and USM's Oak Grove mine located
near Oak Grove, Ala. The sale is expected to be completed in the
second quarter.
As previously reported, Fitch currently rates the senior
unsecured debt of U.S. Steel 'BB', with stable outlook.
UNITED DEFENSE INDUSTRIES: Shareholders' Meeting Set for May 21
---------------------------------------------------------------
The Annual Meeting of Stockholders of United Defense Industries,
Inc., a Delaware corporation, will be held on Tuesday, May 21,
2002, at 11:00 a.m., local time, at the Hyatt Arlington Hotel,
1325 Wilson Boulevard, Arlington, Virginia 22209, for the
following purposes:
1. To elect nine directors to hold office until the next
annual meeting of stockholders and until their
respective successors have been elected or appointed.
2. To approve the amendment of the United Defense Stock
Option Plan to increase the number of shares issuable
under such plan by 4,000,000 shares and to allow for the
grant of restricted stock to eligible individuals.
3. To ratify the appointment of Ernst & Young LLP as
independent auditors to audit the accounts of the
Company for the fiscal year ending December 31, 2002.
4. To transact such other business as may properly
come before the Annual Meeting and any adjournment or
postponement thereof.
The Board of Directors has fixed March 28, 2002, as the record
date for determining stockholders entitled to vote at the Annual
Meeting of Stockholders.
UDI designs, manufactures, and supplies tracked armored combat
vehicles and weapons systems for the US military and the
militaries of certain allied governments. The company is a sole-
source/prime contractor for a number of important defense
programs including the Bradley family of vehicles, the M113troop
transport vehicle, the M88 tank recovery vehicle, the M109self-
propelled howitzer, and the Crusader. At December 31, 2001, UDI
had a total shareholders' equity deficit of $166 million.
W.R. GRACE: Judge Fitzgerald Sends Bar Date Motions to J. Wolin
---------------------------------------------------------------
On her own motion, Judge Judith K. Fitzgerald transfers the
W. R. Grace & Co.'s Motion and its related requests for relief
concerning case management, a bar date, approval of the proof of
claim forms and of the notice program for asbestos claim matters
to Judge Alfred M. Wolin. This transfer includes all responses
and replies to these Motions.
PI Committee Says Need Revisions to Order
The Official Committee of Asbestos Personal Injury Claimants,
represented by Matthew G. Zaleski III of the Wilmington firm of
Campbell & Levine, asks Judge Fitzgerald for the entry of an
Order correcting the Court's Order Transferring Certain Asbestos
Personal Injury Asbestos Claim Matters to the Honorable Alfred
M. Wolin, District Judge for New Jersey.
No Hearing to consider the Original Bar Date Motion on the
merits was ever held. On or about December 10, 2001, Judge Wolin
entered the Order (1) Referring Certain Cases to the Bankruptcy
Court and (2) Allocating Responsibilities Between the District
Court and the Bankruptcy Court ordering "that the withdrawal of
the references is specifically contemplated with respect to
asbestos-related claims and issues. . . ." Subsequently, at a
conference held in December 2001, Judge Wolin specified that the
withdrawal of the reference to the Bankruptcy Court applied to
the Original Bar Date Motion.
Consequently, on or about February 12, 2002, the Debtors filed
and served (a) Debtors' Revised Motion as to All Asbestos
Personal Injury Claims for Entry of Case Management Order,
Establishment of Bar Date, Approval of the Proof of Claim Forms
and of Notice Programs and (b) Debtors' Consolidated Reply in
Support of Thereof. No Objection Deadline, Briefing Schedule, or
Hearing on the Revised Bar Date Motion was ever established.
Judge Fitzgerald has now entered an Order transferring the
Revised Motion and related pleadings to Judge Wolin.
The P.I. Committee submits that the Transfer Order contains
certain mistakes that are the result of oversight or omission
and that the Court may correct these errors. First, although the
Transfer Order references the Original Objection as a relevant
document, it omits reference to the related and
contemporaneously-filed Peterson Affidavit. Second, although the
Transfer Order references the Motion for Leave and related
Order, it omits reference to the P.I. Committee's Objection. The
P.I. Committee submits that the Omitted Pleadings are a part of
the record on this matter, should have been referenced in the
Transfer Order, and that the Transfer Order should be modified
to reflect their inclusion. Additionally, the P.I. Committee
notes that certain other pleadings in the record on this matter
should have been included in the Transfer Order or were
incorrectly referenced therein. By way of example, the Transfer
Order references Docket Number 621 as a relevant pleading.
According to the CM/ECF Docket, Number 621 is an Entry of
Appearance on behalf of Nortel Networks, Inc.
Rule 60(a) of the Federal Rules of Civil Procedure, made
applicable to these proceedings by Rule 9024 of the Federal
Rules of Bankruptcy Procedure permits issuance of a revised
order at any time where clerical mistakes in judgments, orders
or other parts of the record and errors arising from oversight
or omission should be corrected. The P.I. Committee notes that
during the pendency of these Chapter 11 cases, the Clerk of the
Bankruptcy Court implemented several changes and modifications
to the Court's filing and docketing system. The P.I. Committee
submits that this may have led to certain mistakes concerning
the docket numbers of several pleadings. A review of the Court's
CM/ECF Web site docket reflects numerous entries that are non-
sequential or otherwise confusing. The docket numbers contained
in the Transfer Order thus do not correctly represent documents
that the Court may believe are relevant to the adjudication of
the Revised Bar Date Motion.
The Docket Numbers employed in the Transfer Order appear to have
been drawn in significant part from the Debtors' Notice of
Agenda of Matters Scheduled for Hearing on February 25, 2002.
When compared to the CM/ECF docket numbers, the docket numbers
contained on the Agenda appear to be incorrect. For example, the
Agenda lists the Original Bar Date Motion as "Docket No. 536,"
the CM/ECF lists the Original Bar Date Motion as Number 586.
Additionally, the P.I. Committee believes that the Transfer
Order citations to Docket Numbers 620, 621, and 623 were
intended to reference the (a) United States Response to Debtors
Motion for Entry of a Case Management Order, Motion to Establish
Bar Date, Motion to Approve Claim Forms, and Motion to Approve
Notice Program, (b) Medical Monitoring Claimants' Objection to
Debtors' Motion for Entry of Case Management Order,
Establishment of Bar Date, Approval of Proof of Claim Forms and
Approval of Notice Program, etc., and (c) Zonolite Plaintiffs'
Objection to Debtors' Motion for Entry of Case Management Order,
Establishment of Bar Date, Approval of Proof of Claim Forms and
Approval of Notice Program, etc., respectively. Consequently,
the P.I. Committee submits that, if the Court's intention was to
include these pleadings in the record of this matter, the Court
should further correct the Transfer Order so that the CM/ECF
Docket Numbers are substituted for those originally included.
Counsel for the P.I. Committee has discussed the relief
requested herein with counsel for the Debtors and has provided a
draft of the Motion for their review and consideration. The
Debtors have no objection to the requested correction of the
Transfer Order. Rather, the Debtors have requested that the P.I.
Committee seek to have the Transfer Order further corrected to
include the Original Bar Date Order, Original Memorandum, and
Original Exhibits.
The P.I. Committee therefore requests that Judge Fitzgerald
enter an Order (a) correcting the Transfer Order to include the
Omitted Pleadings and the Original Bar Date Pleadings, and (b)
correcting certain docket numbers contained in the Transfer
Order so as to reflect the numbers assigned to such pleadings on
the Bankruptcy Court's CM/ECF Docket. (W.R. Grace Bankruptcy
News, Issue No. 22; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
WASH DEPOT: Seeking Court Authority to Employ Ernst & Young
-----------------------------------------------------------
Wash Depot Holdings, Inc. and its debtor affiliates seek
authority from the U.S. Bankruptcy Court for the District of
Delaware to retain and employ Ernst & Young LLP as their
accountants and tax advisors, nunc pro tunc to November 12,
2001.
The Debtors wish to employ Ernst & Young to provide all
accounting, tax and auditing services needed in these chapter 11
cases. Ernst & Young has extensive experience in providing
accounting and auditing services to businesses in Chapter 11
proceedings both in and outside the District of Delaware. The
Debtors relate that they tapped Ernst & Young for the previous
seven years in a similar capacity. This engagement afforded
Ernst & Young a familiarity with their financial, accounting and
tax-related issues, the Debtors explain.
Primarily, the Debtors will look for Ernst & Young's assistance
on:
i) preparation of the Debtors' federal, state and local tax
returns that must be filed, including income tax returns
for the tax year 2000 which, per an extension filed by
the Debtors, need to be filed with the Internal Revenue
Service and various state taxing authorities in which
they maintain operations;
ii) the provisions of accounting, tax and auditing services
and advice in connection with ongoing activities and
obligations; and
iii) the provision of necessary accounting analysis and
advice in support of the Debtors' chapter 11 plan and
bankruptcy cases.
Waiting for the Court's approval, the Debtors are willing to pay
Ernst & Young with its usual and customary hourly rates:
Partners/Principals $575-$850
Senior Managers $523-$582
Managers $418-$495
Seniors $303-336
Staff/interns $116-$215
Ernst & Young will bill the Debtors on a fixed rate basis for
performing tax compliance services:
Tax year 2000: $65,000
Tax year 2001: $75,000
Wash Depot Holdings, Inc. which provides car washing services,
filed for chapter 11 protection on October 1, 2001 together with
its direct and indirect subsidiaries. Michael R. Lastowski, Esq.
at Duane, Morris & Heckscher LLP and Daniel C. Cohn, Esq. at
Cohn, Kelakos, Khoury, Madoff & Whitesell LLP represent the
Debtors in their restructuring efforts.
WESTPOINT STEVENS: Sets Shareholders' Meeting for May 8, 2002
-------------------------------------------------------------
The Annual Meeting of Stockholders of WestPoint Stevens Inc.
will be held at the Cotton Duck, 6101 Twentieth Avenue (U.S.
Highway 29), Valley, Alabama 36854 on Wednesday, May 8, 2002, at
9:00 a.m., E.D.S.T., for the following purposes:
1. To elect two directors to serve in Class I for a term
of three years and to serve until their respective successors
are elected and qualified;
2. To ratify the appointment of Ernst & Young LLP,
independent certified public accountants, as auditors for the
Company for the fiscal year ending December 31, 2002;
3. To consider and act upon a proposal by certain
stockholders concerning child labor; and
4. To act upon such other matters as may properly come
before the meeting or any adjournment or adjournments thereof.
Only stockholders of record at the close of business on March
15, 2002, are entitled to notice of, and to vote at, the
meeting.
The firm is the #1 US maker of bed linens and bath towels and
also makes comforters, blankets, pillows, table covers, and
window trimmings. It makes the Martex, Utica, Stevens, Lady
Pepperell, Grand Patrician, and Vellux brands, as well as the
Martha Stewart bed and bath lines; other licensed brands include
Ralph Lauren, Disney, and Joe Boxer. Department stores, mass
retailers, and bed and bath stores are its main customers.
(Federated, J.C. Penney, Kmart, Sears, and Target account for
more than half of sales.) It also has nearly 60 outlet stores.
Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. At September 30, 2001, Westpoint Stevens had a total
shareholders' equity deficit of about $700 million.
*********
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